The U.S. residential real estate market has hit a rough patch, leading some industry insiders to scale back on once positive outlooks for the housing sector.
That reality hit home this week with the release of Realtor.com's monthly home sales data report, which shows a marked decline in residential sales activity. According to Realtor.com, home sales fell by 12% from August to September, and June and July figures were revised downward to fall into negative territory as well.
"The new home sales report covering September released today shows a rate well below the consensus estimate and indicates that real issues emerged late this summer in the new homes market, questioning the supposedly strong growth signals that were previously interpreted by many," said Jonathan Smoke, chief economist at Realtor.com, in an email to MainStreet.
"Last year we picked up momentum in the late summer and fall," Smoke added. "This year seems to be the opposite-we are losing momentum."
Smoke also said the median U.S. new home price, $296,900 in September, increased 3% over August and is up 14% over last year - but those figures could be deceiving.
"That's an important clue as to why growth seems to be stalling out," he said. "The median new home price had been declining since the end of last year, which is what we would need to see if builders were aiming to grow sales to first time buyers by providing more affordable, entry-level homes. However, the shift up this summer and fall reflects that few builders are able to offer product to first-time buyers."
Another indicator comes from the existing home market, where industry analysts saw a decline in pending sales and existing home closings in August.
"That decline was likely a result of the stock market declines in August and September," Smoke said. "If builders are not focusing on first-time buyers, they are focusing on the segments most likely to be disrupted by declines in stock portfolios and retirement plans."