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NEW YORK (AP) – Many small businesses linked to the housing market are experiencing a downturn in their operations, which is expected to continue until 2020.
Reports on home sales, the home improvement market, and sales of furniture and furnishings show the growing fallout from rising house and apartment prices.
The National Association of Realtors said last week that existing home sales fell 2.2% in September, extending their erratic performance this year. As sales are up nearly 4% from a year ago, an increase due to falling mortgage rates, potential buyers are being pushed back by steadily rising house prices. The median selling price of a home is up almost 6% from a year ago to $ 272,100, realtors said. The housing shortage in the market also held back sales.
Meanwhile, the Commerce Department said Thursday that new home sales fell 0.7% last month.
Many homeowners repair or renovate their home before putting it on the market or after purchasing it. But with the fluctuation in sales, there are fewer renovations going on and therefore contractors, many of whom are small businesses, have less work. Harvard University’s Joint Center for Housing Studies predicts that renovation activity, which researchers say peaked a year ago, will continue its decline until the third quarter of 2020.
âContinued weakness in sales of existing homes and new construction will cause slow renovation activity next year,â Chris Herbert, general manager of the center, said in a statement.
The leading indicator of the center’s renovation activity showed that spending on home renovations and repairs rose at an annual rate of 5.9% to 5.9% in the third quarter, compared to 6.6% in the second quarter. . It peaked at a 7% gain in the fourth quarter of last year. It is expected to fall to -0.3% in the third quarter of 2020, indicating a decline in remodeling activity.
Sales of furniture and home furnishings, meanwhile, fell 0.2% in the first nine months of this year compared to the same period of 2018, according to the Commerce Department. Sales at retailers of electronics and appliances, whose merchandise includes refrigerators, washers and dryers, fell 3.9%. When people aren’t buying new homes, they have less reason to shop at these retailers.
Commerce Department figures do not break down the sales of small retailers or independent retailers versus large chain stores. However, the trends of small businesses tend to mirror those of their larger competitors.
Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg. Her work can be found here: https://apnews.com