US home resales cool off in August

FOLLOWING three consecutive months of gains, the rate of US home resales fell by more than analysts’ forecasts in August, according to data released by the National Association of Realtors (NAR) yesterday.

The annualised figure was down 4.8 per cent in August from an eight-year high of 5.58m in July. NAR chief economist Lawrence Yun blamed the decline on tight inventory. The home resales figure, which strips out new housing starts, is often seen as leading indicator of spending in the economy.

Despite August’s decline, US home resales have increased year-on-year for 11 consecutive months. John Ryding and Conrad DeQuadros of RDQ Economics said: “We think the housing market remains in a broad-based gradual recovery that will be buoyed by a continued pickup in household formation.”

Considering the impact of a rate rise on the housing market Yun said: “the impact on mortgage rates and overall housing demand will likely not be pronounced. With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates.”