Harvey and Irma to impact home sales in the short term

As homebuilding permits have declined in recent months, the market for potential existing-home sales fell to a 5.71 million seasonally adjusted, annualized rate in August, a decline of 1.3% from July, according to First American Financial Corp.

Potential existing-home sales decreased by 3.7% year-over-year in August for a loss of 221,000 sales. The market for potential existing-home sales is underperforming its potential by a projected 206,000 sales, or 3.6%.

Going forward, Hurricanes Harvey and Irma are expected to impact the market of home sales in the short term, as loan closings are postponed and some borrowers with pending contracts withdraw their bids on damaged homes, according to Mark Fleming, chief economist at First American.

"The Houston metropolitan area and the impacted Florida counties alone accounted for 8% of all U.S. existing-home sales in 2016," Fleming said in a press release.

"As recovery efforts move forward, the pre-hurricane shortage of construction workers will likely hamper the process of rebuilding efforts, and further limit the pace of new home construction, as the limited labor supply shifts away from new-home construction to rebuilding efforts."

The potential existing-home sales market is 11.5%, or 656,000 sales, below the July 2005 pre-recession peak of market potential, but up 89.9% from the market potential low point reached in December 2008.

The number of homes listed for sale has declined for 26 consecutive months, and has fallen 9% over the past 12 months, according to the National Association of Realtors.