In October, new home sales retreated once again, leading experts to cast less than optimistic forecasts about the state of the housing market.
According to the U.S. Census Bureau and the Department of Housing and Urban Development, sales of new single-family houses decreased 8.9% to 544,000 in October.
This is down from September’s revised rate of 597,000 and 12% below sales made in October 2017.
Experts indicate that not only are affordability concerns hindering growth, but a wake of natural disasters are weakening the sector.
Jay Plum, executive vice president of consumer and mortgage lending at Huntington Bank, said the latest report was "underwhelming."
"[It is] in line with recent signs of duress due to a medley of factors, including rising interest rates, notable yet slowing home price appreciation, increasing builder costs and adverse weather events,” Plum said.
“In the East, hurricanes have had an effect that we continue to see, and in the West, price appreciation has reached a point that buyers’ interest is slowing,” Plum continued. “The price appreciation has not been as dramatic in the Midwest, but the impact of rising interest rates, even with that modest appreciation, is impacting payments.”
In fact, First American’s latest Real House Price Index revealed home prices have climbed 15.3% year over year, heightening affordability concerns.
Mortgage Bankers Association Chief Economist Mike Fratantoni cites California’s recent wildfires as cause for concern.
“The hurricanes in the South and wildfires in the West likely impacted both month’s numbers and continue to cloud the picture of the housing market’s overall strength,” Fratantoni said. “
Over the weekend, a climate report issued by 13 U.S. federal agencies warned that if not confronted, climate change could potentially have adverse consequences for America’s environment and economy.
"Without substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century,” the report stated.