The pronounced slowdown in U.S. home sales in the second half of 2013 was primarily caused by a rise in mortgage rates that made borrowing more expensive for potential home buyers, according to new research from the Federal Reserve Bank of San Francisco.
The U.S. housing recovery has slowed over the last year. Sales of previously owned homes, a key indicator that accounts for the vast majority of home sales, hit a seasonally adjusted annual rate of 5.38 million last July, according to the National Association of Realtors. Existing-home sales have slumped since then, and in March were down 7.5% from a year earlier.
Overall, the economy and the housing market are improving. But when it comes to the economy and home sales, nothing goes straight up. As a result, we should expect home sales to occasionally pull back before moving forward again.