US housing recovery sputters

The American housing market rebound seems to be running out of steam after a hefty two-year bounce. Sales of new single-family houses are down 4.2% year-on-year, while sales of previously owned dwellings are down 7%.

One problem is that a rapid bounce-back in prices has put off potential buyers, while mortgage interest rates have jumped, undermining enthusiasm among consumers already grappling with weak wage growth. Thirty-year mortgage rates are 1% up on last spring.

What’s more, credit is still being rationed. Mortgage financing remains “extremely tight”, says Ellen Zentner of Morgan Stanley, and builders are also having trouble getting [...]

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