Existing Homes Sales fell 1.17% from May to June, creating a negative headline about falling home sales. Some may wonder whether higher mortgage rates are having a negative impact on the housing market. The answer is no. The June decline is normal and not far off from the typical June change of -0.2%. This year’s decline is also milder than last year’s event.
Relax, the housing market recovery is not about to collapse because of interest rates or because of a lack of inventory. A relatively tight inventory (7.6% below this time last year) will work nicely to keep prices edging higher and thus induce new sellers into the market.
Weakness in the housing market will be precipitated by a slowdown in job creation. The delay in the implementation of the Affordable Care Act will likely cause uncertainty in businesses and thus an increased reluctance to hire. Add in a probable correction in the stock market and now you have the makings for a troubled housing market in 2014.
