Nov. 28 (Bloomberg) – Sales of previously owned homes in the U.S. fell in October to the lowest level in at least eight years as loan restrictions and the prospect of further price declines deterred buyers, economists said before a report today.
Purchases dropped 0.8 percent to an annual rate of 5 million, according to the median forecast of 70 economists surveyed by Bloomberg News. That would mark the eighth straight month of decreases and bring the pace of home sales to the slowest since record-keeping began in 1999.
Defaults on subprime mortgages have prompted banks to tighten lending standards, while foreclosures add to a glut of unsold properties that’s putting pressure on home prices. Lower property values raise the risk that consumers will curtail spending, making businesses more cautious about investing and compounding a slowdown in economic growth, economists said.
We don't see much light at the end of the housing tunnel,'' Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report.This certainly will have an impact on consumer spending first, and given that business confidence is declining, we should see a pullback in business spending over the next few months.’’