U.S. existing home sales fall, investors pulling back
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. home resales unexpectedly fell in August as investors stepped away from the market, but the decline probably does not signal renewed weakness.
The National Association of Realtors said on Monday existing home sales dropped 1.8 percent to an annual rate of 5.05 million units. The decrease was the first in four months, although the sales pace was still the second highest for the year.
"There is no fundamental economic weakness story in the fall. Maybe investors are leaving the market because home prices are too high and (there are) no more bargains to be had," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
Economists had forecast sales increasing to a 5.20 million-unit pace. Compared to August last year, sales were down 5.3 percent.
Investors had propped up the market by snapping up distressed properties and converting them into rental units. But last month they accounted for only 12 percent of transactions, which was the smallest share since November 2009.
Although first-time buyers did not step up in August, the retreat by investors means fewer bidding wars and increased opportunities for ordinary buyers that could support sales going forward. In addition, a strengthening labor market is likely to culminate in faster wage growth, bolstering potential buyers.
Equities investors were not heartened, however. Housing shares fell on the data, underperforming the broader market. PulteGroup (PHM.N: Quote) dropped 2.12 percent, while KB Home (KBH.N: Quote) fell 2.48 percent and Toll Brothers (TOL.N: Quote) declined 2.27 percent. The dollar was little moved against a basket of currencies, while prices for U.S. Treasury debt were higher.