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January Home Sales Decline in U.S.- Mortgage Rates Up
Feb 27, 2006- Linknet Finance News

January Home Sales Decline in U.S.- Mortgage Rates Up

January Home Sales Decline in U.S.- Mortgage Rates Up

Feb 27, 2006 - Linknet Finance News - New home sales in the U.S. in January fell to the lowest level in a year, and he number of properties for sale was at its highest ever. This is consistent with predictions that residential real estate sales in 2006 may slow down after five record years.

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The sales reduction was greater than expected. Numbers were down 5% to an annual rate of 1.233 million from a revised 1.298 million in December. Numbers were from the Commerce Department in Washington. The number of homes for sale rose to 528,000 in January, the most ever, from December's 515,000. But resale homes make up about 85% of the total market.

Gradually rising mortgage rates and inflated home prices will slow sales in 2006, and may contribute to a slowing of the economy in the second half. But an improving outlook for jobs and incomes will keep sales from falling too far, economists said.

With the rise in mortgage rates and home prices the affordability of homes fell to the lowest level in more than 14 years in the last quarter of 2005. It is expected to decline even further in 2006 as both rates and prices are expected to continue rising.

30-year fixed mortgage average rates rose to 6.15 percent in January from 5.71 percent a year earlier. Rates reached 6.26% last week after a continued gradual rise in February.

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