Summer Sales Not as Hot as Expected
Existing U.S. home sales fell 1.8 percent in August to an annualized rate of just over 5 million units, as reported in September by the National Association of REALTORS®. Despite this, the pace was still the second highest for the year, even as real estate investors stepped away from the market.
In August, investors accounted for just 12 percent of total home purchases nationwide, down from 16 percent in July. Investor activity in 2012 and 2013 was credited for driving double-digit home price percentage gains in many parts of the country. During the worst of the housing crash, investors made up nearly one-third of total home purchases, with some markets seeing them buy up more than half of the available inventory, according to a CNBC report.
First-time Buying Activity Down
According to the NAR report, first-time home buyers accounted for 29 percent of August buyers. Historically, first-timers make up around 35 to 40 percent of the market. As a result, rentals are up 3 percent, with single-family rentals keeping first-timers off the housing block.
"Home sales have not yet been offset by the first-time home buyer, who is more interested in renting than buying," as reported by CNBC and according to Peter Boockvar, chief market analyst with the Lindsey Group. Boockvar cited faster income growth, slower home price gains and looser credit standards as three necessary factors to bringing first-time home buyers back.
According to a Bloomberg report, millennial and young professionals were hardest hit during the recession and are the weakest group of home buyers. High levels of student debt and underemployment are preventing them from saving for a down payment on a
In response, home builders are focusing on move-up models rather than cheaper, entry-level homes.
As the end of the year approaches, so does the natural decline for home buyer traffic during holiday months. Check back in January's REALinsight for a Market Watch: 2015 forecast.