The total number of U.S. residents who signed contracts to buy existing homes was essentially unchanged in the fourth quarter of 2013, suggesting home sales are stabilizing after several months of declines. However, the calendar-year figure of Americans’ applying for mortgages to purchase residential properties fell to an almost 13-year low in the last week of 2013. In addition, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking survey, the investor share of residential home purchases fell by six percent this year. As home sales stalled, inventory began improving – the number of homes-for-sale in December of 2013 rose 1.8 percent[1] compared with a year earlier. In Los Angeles, Atlanta, and Orlando, home inventory was 10 percent higher than the previous comparable period. Despite the sale declines, home re-sales reached 5.1 million in 2013, which was the best of the past seven years, according to the Realtors forecast.
The average interest rate on a 30-year mortgage has risen since the spring, and increased slightly to 4.48 percent in the last week of 2013. The higher borrowing costs have made homes less affordable. Federal Reserve Chairman Ben Bernanke indicated that the Fed would start to slow its bond-buying program, and earlier in December, the Fed announced it would reduce its $85 billion in monthly purchases by $10 billion a month starting in January 2014. As a result, rates would rise further.
As measured by the S&P/Case-Shiller 20-city home price index, montly price gains slowed in 18 of the 20 cities, and the price declined in nine cities, including Chicago, Denver, and Washington. However, over the whole year, prices are still strong, up more than 19 percent year-over-year in Atlanta, Las Vegas, Los Angeles, San Diego, and San Francisco, fueled in part by a limited supply of homes for sale.
[1] National Association of Realtors
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