There has been much speculation about what is causing the falling sales numbers in the most recent Existing Home Sales Reports
(EHS) from the National Association of Realtors
(NAR). Some have claimed that rising interest rates have scared buyers out of the market. Others have claimed that consumers are just losing confidence in the housing recovery fearing a new bubble may be forming. We want to look at the validity of these two assumptions.
MORTGAGE INTEREST RATES
Rising interest rates have forced buyers back onto the fence. Evidence offered up by those in this camp comes directly from the EHS Report from NAR. Three of the last four reports revealed that sales were below sales from the same month the previous year.
Though it is true year-over-year sales have fallen nationally, a closer look at the report reveals major regional differences. Sales in the West Region are down 10.7% versus the same month last year. Sales in the Midwest Region are also down but by less than 1%. The Northeast Region is up
3.2% and the Southern Region is up
If the issue is interest rates, why is one region virtually unchanged and two of the remaining three regions up in sales? We don’t believe rates are the challenge.