While it might seem easy, or even logical, to blame the hurricanes for the slow down in home sales, Ten-X, an online real estate transaction marketplace, explained sales were slowing down even before the hurricanes hit.
And now, the disaster left by the hurricanes will magnify the already low inventory and rising home prices, according to the latest Ten-X Residential Real Estate Nowcast.
“Existing home sales appeared to be slowing down even before the devastation caused by Hurricanes Harvey and Irma.” Ten-X Executive Vice President Rick Sharga said. “The housing market is likely to suffer over the next few months as the economic disruption caused by the hurricanes exacerbates the dual problems of low inventory and escalating home prices.”
In its Nowcast, Ten-X predicted existing home sales will fall 0.4% from September to a seasonally adjusted annual rate between 5.19 million and 5.54 million, with a targeted number of 5.33 million.
But Ten-X isn’t the only company predicting a drop in home sales. After pending home sales, a forward-looking indicator based on contract signings, decreased, the National Association of Realtors reduced its full-year outlook. For the first time this year, NAR predicted existing home sales would be down in 2017 compared to 2016.
Last month, Ten-X predicted existing home sales would decrease 0.1% in August to 5.43 million. NAR’s report shows sales did, in fact, decrease, by 1.7% to 5.35 million. The company also predicted home prices would increase 7.5% from last year, and according to NAR’s report, they increased 5.6%.
In September, Ten-X predicted the median home prices will fall between $239,205 and $264,385 with a target price point of $251,795. This would be down 0.7% from August but up 7.5% from last year.
“US home sales are struggling to progress amid historically tight inventory levels,” Ten-X Chief Economist Peter Muoio said.
“While the inventory shortage is a boost for existing home owners, intensifying competition among buyers creates affordability concerns,” Muoio added. “The recent hurricanes and other economic factors like student debt and slowing wage growth will likely have an impact on housing sales as we move into what is traditionally a slow quarter for the housing market.”