Current market conditions have caused existing-home sales capacity to recede in October, according to a report by First American Financial Corp.
The Santa Ana, Calif.-based title insurance provider found that its proprietary Existing-Home Sales Capacity rate, seasonally adjusted and annualized, dropped 3.1% from September, and 7.3% compared to the same period last year.
First American also reported an underperformance gap of 779,000 sales, on a seasonally adjusted, annualized basis.
"The housing market’s capacity for existing home sales is declining with the expectation of a Fed rate increase pre-adjusting mortgage rates and causing a slowdown in house price appreciation," said First American's chief economist Mark Fleming in a Nov. 19 press release. "Market capacity remains modestly in excess of actual sales due to leverage-assisted housing asset inflation, which is home price appreciation fueled by low mortgage rates."
Fleming also noted that he expected existing-home sales, seasonally adjusted and annualized, to drop to 5.44 million in October, down from an estimated 5.55 million in September. The level should taper back up to 5.5 million by the end of the year, he added.
