WASHINGTON (Reuters) -Contracts to purchase previously owned U.S. homes were unexpectedly unchanged in September, likely as worries about the labor market kept prospective buyers on the sidelines despite declining mortgage rates.
The flat reading in pending home sales last month, which was reported by the National Association of Realtors on Wednesday, followed an upwardly revised 4.2% increase in August. Economists polled by Reuters had forecast contracts, which become sales after a month or two, would rise 1.0% after a previously reported 4.0% advance in August. Pending home sales dropped 0.9% from a year earlier.
“A record-high stock market and growing housing wealth in September were not enough to offset a likely softening job market,” said Lawrence Yun, the NAR’s chief economist.
Contracts dropped 3.4% in the Midwest and slipped 0.2% in the West. They, however, increased 1.1% in the densely populated South and jumped 3.1% in the Northeast.
Mortgage rates have declined as the Federal Reserve resumed cutting interest rates. The U.S. central bank is expected to lower its benchmark overnight interest rate by another 25 basis points to the 3.75%-4.00% range later on Wednesday.
The average rate on the popular 30-year fixed-rate mortgage dropped to 6.30% at the end of September from about 6.56% in August, data from mortgage finance agency Freddie Mac showed. It has since declined to a one-year low of 6.19%.
But lower mortgage rates have been somewhat overshadowed by growing anxiety over the labor market.
A shutdown of the U.S. government has delayed the release of official labor market reports and other economic data, but independent surveys have suggested lackluster conditions have persisted since the release of the employment report for August, which showed stagnation in job growth and a rise in the jobless rate to nearly a four-year high of 4.3%.
A survey from the Conference Board on Tuesday showed the share of consumers who expected fewer jobs over the next six months increased in October to the highest level since April. The proportion anticipating more jobs over that period was the lowest in six months.
The labor market’s sluggishness largely reflects tepid business hiring, with economists saying companies were opting to absorb higher costs from tariffs on imports at the expense of adding headcount. With major companies like Amazon.com and UPS cutting jobs in favor of automation, layoffs could soon pick up.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
Comments