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US existing home sales plunge; new rules seen as drag
[WASHINGTON] US home resales posted their sharpest drop in five years in November, a potential warning sign for the health of the US economy although new regulations on paperwork for home purchases may have driven the decline.
The National Association of Realtors said on Tuesday existing home sales plunged 10.5 per cent to an annual rate of 4.76 million units. That was the sharpest decline since July 2010. October's sales pace was revised slightly lower to 5.32 million units.
Housing has been providing a sizable boost to US economic growth this year as a strengthening labour market and low interest rates have helped young adults to leave their parents' homes.
Economists had forecast sales rising to a rate of 5.35 million units last month.
NAR economist Lawrence Yun said most of November's decline was likely due to regulations that came into effect in October aimed at simplifying paperwork for home purchasing. Yun said it appeared lenders and closing companies were being cautious about using the new mandated paperwork.
Also potentially weighing on home sales, the median price for a U.S. existing home rose to US$220,300 in November, up 6.3 per cent from the same month in 2014. Yun said the steep rise in prices and shrinking inventories could also be constraining home purchases.
Sales dropped across the country, down 13.9 per cent in the West, 6.2 per cent in the South, 15.4 per cent in the Midwest and 9.2 per cent in the Northeast.