Tag Archives: Real Estate/Construction

China’s Covid Protests Began With an Apartment Fire in a Remote Region

As smoke crept through the 21-story apartment building in far western China, panicked messages filled the residents’ chat group. “On the 16th floor, we don’t have enough oxygen,” a woman gasped in an audio message. “Soon our children won’t be OK.”

Another person added a plea about the people in apartment 1901: “They wouldn’t be able to open the door. Can you break into it and take a look? There are many children inside.”

Many who heard the reports were shocked, not by a tragedy in the remote city of Urumqi, but because it had taken firefighters three hours to control the fire. People across the country believed the delays happened in part because of the pandemic restrictions that have been a running source of discontent throughout the country. The impact has reached into the heart of Chinese politics.

Excerpts of residents’ panicked conversation began to circulate on social media, along with videos of the emergency response. They showed fire crews struggling to get around barriers to approach the building. Videos showed fire crews’ water streams falling short of the fire as its flames slithered toward the top of the apartment tower.

Pandemic controls imposed by Chinese authorities around, and possibly inside, the apartment building had delayed the fire response, neighbors and family members of those killed have said. That would mean that the death toll, which many believed was much higher than the official tally of 10, was ultimately in part a product of China’s strict, already widely detested zero-tolerance Covid policy. The government denies all that.

Outrage spilled onto the streets of Urumqi, the capital of the heavily Muslim Chinese region of Xinjiang, where residents had been locked down for more than 100 days. Footage of the fire and the protest in Urumqi spread on Chinese social media and on the popular do-everything app

WeChat.

Firefighters sprayed water on a residential-building fire in the city of Urumqi that killed 10 and triggered protests against Covid-19 lockdowns.



Photo:

Associated Press

To large numbers of Chinese people who have had the experience of being locked inside their own apartments because of Covid controls, the words and images flowing out of Xinjiang conjured a scenario that seemed terrifyingly plausible.

“The 100-plus day lockdown is real. The many deaths from Covid controls are real. Discontent has accumulated and is destined to erupt,” said a user on the Twitter-like

Weibo

platform in one widely endorsed comment about the fire.

Within days, the protest would spread throughout China, growing into the largest show of public defiance the Communist Party has faced since the 1989 pro-democracy protests at Tiananmen Square. The demonstrations have posed a rare challenge to the recently extended rule of Chinese leader

Xi Jinping,

compounding the government’s challenges over how to ease its Covid restrictions.

Large protests erupted across China as crowds voiced their frustration at nearly three years of Covid-19 controls. Here’s how a deadly fire in Xinjiang sparked domestic upheaval and a political dilemma for Xi Jinping’s leadership. Photo: Thomas Peter/Reuters

China has experienced public outrage over its strict Covid-19 restrictions before, most of which the authorities had managed to contain online. Going back nearly three years, the death from the coronavirus of Li Wenliang, a doctor who was punished for warning others about the initial outbreak in Wuhan, unleashed a flood of grief and anger.

This September, a bus crash in Guizhou province that killed 27 people who were being sent to quarantine in the middle of the night raised an outcry about steps taken to control the coronavirus.

Mourners in Hong Kong paid their respects in February 2020 to Chinese physician Li Wenliang. Dr. Li raised early alarms about the coronavirus outbreak in Wuhan but was silenced by police, only to die of the disease himself.



Photo:

jerome favre/EPA/Shutterstock

More recently, after an announcement that Covid restrictions would be eased led to little actual change, public frustration spilled out onto the streets. Workers at

Foxconn Technology Group’s

main plant in the city of Zhengzhou, the world’s largest iPhone factory, clashed with police while protesting a contract dispute with roots in pandemic lockdowns. In some Beijing neighborhoods, people argued with officials over the legality of controls.

In maintaining the lockdowns in Xinjiang, local authorities have been able to rely on the country’s most advanced and suffocating security apparatus, originally built to carry out a campaign of ethnic re-engineering against the region’s 14 million Uyghurs and other Turkic Muslims.

Most if not all of the fire’s victims belonged to these groups, according to relatives and overseas Uyghur activists. Discrimination by China’s Han majority against Turkic minorities has long fueled ethnic tensions in the region, which exploded into deadly race riots in Urumqi in 2009.

Yet in the past week, the sides found common cause, at least temporarily, in anger over the fire.

According to an official account published in the state-run Xinjiang Daily newspaper, the blaze began on the 15th floor, in the apartment of a Uyghur woman who was having a bath in a home spa when a circuit breaker flipped. She flipped it back, then was alerted by her daughter to the smell of smoke. When she re-emerged from the bathroom, flames had risen to the wooden ceiling from the bed.

A community worker arrived just as they were fleeing the flames, according to Xinjiang Daily. He called the fire service at 7:49 p.m. last Thursday, then helped rush the pair and their neighbors downstairs.

A still taken from a social media video shows a fire truck shooting water at the burning residential building in Urumqi. The fire and delays in fighting it proved a catalyst for nationwide protests against Covid-19 lockdowns.



Photo:

REUTERS

At the ground level, burning debris had begun falling over the doorway. Those who couldn’t leave through the front gate in time had to climb out of a window from an apartment, the newspaper reported.

Firefighters didn’t reach some of the apartments until around 90 minutes after they were called, according to posts on the chat group.

Video footage showed that traffic-control structures had to be removed as a line of fire trucks waited, causing delays. The government denied the structures had been installed for pandemic-control reasons.

At a press briefing convened late Friday night as protests unfolded, officials said that three fire trucks from a nearby station arrived at the scene five minutes after the fire was reported, but they were blocked by cars that had to be moved.

On social media, residents said those cars had been parked there for months during the fall Covid lockdown, and the engines couldn’t start.

Li Wensheng, Urumqi’s fire chief, said at the press briefing that some residents’ “self-rescue abilities were weak,” a comment that added to the simmering anger.

The Xinjiang and Urumqi governments didn’t respond to requests for comment.

Han residents of Urumqi led the protests that unfolded in the freezing night air the day following the fire. Uyghur residents have faced the strictest lockdowns and largely stayed home out of fear they would bear the brunt of any reprisals, overseas activists said.

Demonstrations were fueled by the group chat conversations and footage of obstructed fire trucks, as well as by videos circulating online that appeared to capture the screams of people from the smoldering building. “Open the gate!” one woman could be heard shouting in horror in one video.

On Saturday night, several female students stood for hours on the campus of Communication University of China in Nanjing, holding blank sheets of paper in silence, widely taken to be a reference to Chinese censorship. A male student from Xinjiang offered a tribute to the victims in Urumqi and to “all other victims nationwide,” saying he had been a coward for too long.

A man was arrested on a Shanghai street when protests erupted following a deadly apartment-building fire in China’s Xinjiang region.



Photo:

hector retamal/AFP/Getty Images

That same night, dozens of people in Shanghai gathered for a vigil with flowers and candles near a street named after Urumqi. Passersby joined in, and the crowd grew into the hundreds. Just past midnight, some demonstrators began chanting for Mr. Xi to step down.

Similar protests emerged in half a dozen Chinese cities and more than a dozen university campuses in the following days. In several instances, demonstrators chanted “We are all Xinjiang people.” Others called for democracy and free speech.

Chinese authorities have devoted enormous resources to building domestic security and surveillance systems specifically designed to prevent such wide and unified outbreaks of dissent. While protests aren’t uncommon, scholars who study China say they are almost always local events with little capacity to spread.

The Cyberspace Administration of China issued guidance to companies on Tuesday, including Tencent Holdings Ltd. and ByteDance Ltd., the Chinese owner of short video apps TikTok and Douyin, asking them to add more staff to internet censorship teams, according to people familiar with the matter. The companies were also asked to pay more attention to content related to the protests, particularly any information being shared about demonstrations at Chinese universities and the fire.

In imposing its stringent Covid controls, human-rights activists and other observers say, the Communist Party created an issue that China’s citizens only have to look out their front door to understand. Some Uyghurs affected by the fire said the fear and frustration stemming from pandemic controls crossed deep-seated ethnic divides.

Marhaba Muhammad, now a resident of Turkey, said she read news of the fire with a sense of horror. She recognized the building as the home of her aunt, whom she last visited in 2016, shortly before leaving China. The family lived in apartment 1901, the subject of one of the desperate messages left in the residents’ chat group.

Ms. Muhammad said she and her family abroad learned that the aunt, Qemernisahan Abdurahman, 48, had died in the apartment, along with four children age 5 to 13.

Ms. Abdurahman’s husband wasn’t there. He and an elder son were detained as part of the crackdown in Xinjiang in 2017 and now are imprisoned, said Ms. Muhammad and her brother, Abdulhafiz Maiamaitimin, who lives in Switzerland.

“This news is so painful. No one imagined,” she said.

Qemernisahan Abdurahman, 48, with 3 of her four children who died in the fire in Urumqi.



Photo:

Marhaba Muhammad

In apartment 1801, directly below where Ms. Muhammad’s aunt and children died, a woman also died along with her children, according to Abduweli Ayup, a Uyghur activist in Norway who spoke with relatives and neighbors of the fire victims.

Han Chinese don’t have to fear the level of oppression faced by Uyghurs, Ms. Muhammad said, referring to the Chinese government’s detention of upwards of a million Uyghurs and other Turkic Muslims in internment camps and prisons—a practice the United Nations has said may constitute a crime against humanity.

Yet “after the fire, they realized that Uyghurs today would be the Chinese tomorrow,” she said.

Police have targeted protest participants by using some of the surveillance techniques honed in Xinjiang to target Uyghurs. In chat rooms used to organize demonstrations, protesters have reported police scanning the smartphones of pedestrians for overseas apps such as Twitter and Telegram, a common experience on the streets of Urumqi.

A lawyer representing more than a dozen protesters taken by police said she believes many of her clients were tracked through mobile-phone data, another echo of the Uyghur experience in Xinjiang.

On Tuesday, Chinese-Australian activist and cartoonist Badiucao, who goes by one name, reposted a widely shared video of police on the Shanghai subway checking the phones of passengers on Twitter. He appended a single phrase: “Xinjiang-ization.”

Protesters in Beijing lighted candles during a protest against China’s strict zero-Covid measures.



Photo:

Kevin Frayer/Getty Images

Write to Austin Ramzy at austin.ramzy@wsj.com and to Wenxin Fan at Wenxin.Fan@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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20 dividend stocks with high yields that have become more attractive right now

Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

REIT prices may turn a corner in 2023

REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
SPX,
-0.50%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

Industry numbers

The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

Screen of high-yielding equity REITs

For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

For a broad screen of equity REITs, we began with the Russell 3000 Index
RUA,
-0.18%,
which represents 98% of U.S. companies by market capitalization.

We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

For example, if we look at Vornado Realty Trust
VNO,
+1.01%,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Brandywine Realty Trust BDN,
+1.82%
11.52% 12.82% 1.30% $1,132 Offices
Sabra Health Care REIT Inc. SBRA,
+2.02%
9.70% 12.04% 2.34% $2,857 Health care
Medical Properties Trust Inc. MPW,
+1.90%
9.18% 11.46% 2.29% $7,559 Health care
SL Green Realty Corp. SLG,
+2.18%
9.16% 10.43% 1.28% $2,619 Offices
Hudson Pacific Properties Inc. HPP,
+1.55%
9.12% 12.69% 3.57% $1,546 Offices
Omega Healthcare Investors Inc. OHI,
+1.30%
9.05% 10.13% 1.08% $6,936 Health care
Global Medical REIT Inc. GMRE,
+2.03%
8.75% 10.59% 1.84% $629 Health care
Uniti Group Inc. UNIT,
+0.28%
8.30% 25.00% 16.70% $1,715 Communications infrastructure
EPR Properties EPR,
+0.62%
8.19% 12.24% 4.05% $3,023 Leisure properties
CTO Realty Growth Inc. CTO,
+1.58%
7.51% 9.34% 1.83% $381 Retail
Highwoods Properties Inc. HIW,
+0.76%
6.95% 8.82% 1.86% $3,025 Offices
National Health Investors Inc. NHI,
+1.90%
6.75% 8.32% 1.57% $2,313 Senior housing
Douglas Emmett Inc. DEI,
+0.33%
6.74% 10.30% 3.55% $2,920 Offices
Outfront Media Inc. OUT,
+0.70%
6.68% 11.74% 5.06% $2,950 Billboards
Spirit Realty Capital Inc. SRC,
+0.72%
6.62% 9.07% 2.45% $5,595 Retail
Broadstone Net Lease Inc. BNL,
-0.93%
6.61% 8.70% 2.08% $2,879 Industial
Armada Hoffler Properties Inc. AHH,
-0.08%
6.38% 7.78% 1.41% $807 Offices
Innovative Industrial Properties Inc. IIPR,
+1.09%
6.24% 7.53% 1.29% $3,226 Health care
Simon Property Group Inc. SPG,
+0.95%
6.22% 9.55% 3.33% $37,847 Retail
LTC Properties Inc. LTC,
+1.09%
5.99% 7.60% 1.60% $1,541 Senior housing
Source: FactSet

Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

Largest REITs

Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

Company Ticker Dividend yield Estimated 2023 AFFO yield Estimated “headroom” Market cap. ($mil) Main concentration
Prologis Inc. PLD,
+1.29%
2.84% 4.36% 1.52% $102,886 Warehouses and logistics
American Tower Corp. AMT,
+0.68%
2.66% 4.82% 2.16% $99,593 Communications infrastructure
Equinix Inc. EQIX,
+0.62%
1.87% 4.79% 2.91% $61,317 Data centers
Crown Castle Inc. CCI,
+1.03%
4.55% 5.42% 0.86% $59,553 Wireless Infrastructure
Public Storage PSA,
+0.11%
2.77% 5.35% 2.57% $50,680 Self-storage
Realty Income Corp. O,
+0.26%
4.82% 6.46% 1.64% $38,720 Retail
Simon Property Group Inc. SPG,
+0.95%
6.22% 9.55% 3.33% $37,847 Retail
VICI Properties Inc. VICI,
+0.41%
4.69% 6.21% 1.52% $32,013 Leisure properties
SBA Communications Corp. Class A SBAC,
+0.59%
0.97% 4.33% 3.36% $31,662 Communications infrastructure
Welltower Inc. WELL,
+2.37%
3.66% 4.76% 1.10% $31,489 Health care
Digital Realty Trust Inc. DLR,
+0.69%
4.54% 6.18% 1.64% $30,903 Data centers
Alexandria Real Estate Equities Inc. ARE,
+1.38%
3.17% 4.87% 1.70% $24,451 Offices
AvalonBay Communities Inc. AVB,
+0.89%
3.78% 5.69% 1.90% $23,513 Multifamily residential
Equity Residential EQR,
+1.10%
4.02% 5.36% 1.34% $23,503 Multifamily residential
Extra Space Storage Inc. EXR,
+0.29%
3.93% 5.83% 1.90% $20,430 Self-storage
Invitation Homes Inc. INVH,
+1.58%
2.84% 5.12% 2.28% $18,948 Single-family residental
Mid-America Apartment Communities Inc. MAA,
+1.46%
3.16% 5.18% 2.02% $18,260 Multifamily residential
Ventas Inc. VTR,
+1.63%
4.07% 5.95% 1.88% $17,660 Senior housing
Sun Communities Inc. SUI,
+2.09%
2.51% 4.81% 2.30% $17,346 Multifamily residential
Source: FactSet

Simon Property Group Inc.
SPG,
+0.95%
is the only REIT to make both lists.

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China Dials Back Property Restrictions in Bid to Reverse Economic Slide

For much of the past year, China’s economy has been reeling under Xi Jinping’s dual campaigns to rein in soaring property prices and to stamp out any traces of Covid-19 within the country’s borders.

Now, as he moves to loosen pandemic restrictions, China’s leader, Mr. Xi, is signaling a reversal of his real estate crackdown, too, a tacit acknowledgment of the economic pain and public frustration that the two policies have engendered.

China’s central bank and top banking regulator issued a wide-ranging series of measures aimed at bolstering housing demand and supply, according to a notice circulated on Friday to the country’s financial institutions and officials involved in policy-making. The authenticity of the document was confirmed by people close to the central bank.

The new policies, which were signed off on by Mr. Xi, according to the officials involved in policy-making, unwind some of the previous restrictions aimed at curbing property developer debt and give lenders permission to extend loans to home builders in financial trouble.

“These property measures, on top of announcements of Covid loosening, are a clear indication that Beijing’s efforts to support growth are intensifying,” said

Michael Hirson,

head of China Research at 22V Research, a New York-based firm focused on investment strategy.

While local governments across China have taken more modest measures to ease some of the pressure facing real-estate companies, the new bundle of 16 measures represents the single biggest step yet to rescue a sector that has for decades been a key pillar of growth for the world’s second-largest economy.

The property measures had led to falling home sales, hurting overall growth in the real-estate sector.



Photo:

Cfoto/Zuma Press

Chinese home prices for decades outpaced the rate of broader economic growth.



Photo:

Anthony Kwan/Bloomberg News

The new measures are “massive in scale” and amount to “targeted credit easing for the property industry,” said

Dan Wang,

chief economist at

Hang Seng

Bank China, who drew a contrast with previous rounds of incremental support measures.

As developers face looming loan repayment deadlines, regulators are eager to avoid any systemic risks in the financial sector triggered by a wave of potential defaults, Ms. Wang said. Even so, she added, “demand for home purchase remains weak,” with any reversal in housing-market sentiment likely to depend on the longer-term outlook for the economy.

The easing of real estate and Covid restrictions comes just weeks after Mr. Xi secured another five years in power at a closely watched Communist Party congress. With Mr. Xi having consolidated political control, he now faces the prospect of a third term in office facing the country’s worst prolonged economic slowdown in decades.

Much of the economic weakness is a direct product of his campaign-style clampdowns to crush Covid and, starting last year, tame a four-decade-old property market boom that officials have warned may be a bubble.

The property measures led to increased defaults by property developers, rising bad debts for banks, falling home sales and investment—all of which have weighed heavily on overall growth in recent quarters.

China’s gross domestic product expanded just 3.0% in the first nine months of 2022, well below the government’s official full-year target of about 5.5%, set in March.

China Evergrande Group, long the country’s largest developer, is now its biggest debtor.



Photo:

ALY SONG/REUTERS

Chinese home prices have for decades outpaced the rate of broader economic growth, driving more credit into real estate speculation and further pushing up property values. Authorities in recent years have repeatedly tried to break the vicious cycle with various tightening measures, only to loosen them whenever growth appears threatened.

By 2019, the total value of Chinese homes and developers’ inventory was $52 trillion, according to

Goldman Sachs Group Inc.,

twice the size of the U.S. residential market.

As Beijing tightened the screws on developers last year—and then reaffirmed their commitment to the tougher rules—several private developers began to teeter on the brink of crisis. Among the most prominent was

China Evergrande Group,

long the country’s largest developer and now its biggest debtor, though the concerns have spread to other large private players.

More than 30 developers have defaulted on their dollar-denominated bonds. International investors have dumped their bonds, driving price levels to new lows and leaving even the strongest private developers struggling to sell new debt.

Shares of Chinese property developers surged on Monday following the news.

Country Garden Holdings Co.

, one of the country’s largest real-estate companies by contracted sales, jumped 40% in early trading in Hong Kong, taking its gains this month to more than 200%. A Hang Seng subindex of property stocks rose 7%.

Prices of dollar bonds of developers that haven’t defaulted on their debt—including

Agile Group Holdings Ltd.

and

Longfor Group Holdings Ltd.

—also rose sharply from deeply distressed levels, as investors placed bets on their potential recovery. 

As the broader economic pain mounted this year, regulators and regional governments moved only modestly to try to avert a full-blown housing crisis, introducing limited measures such as tax rebates, cash rewards and lower down payments, as well as providing banks with window guidance to increase property lending. But those piecemeal moves have so far failed to reverse sentiment and lift the sector.

In October, sales at the country’s 100 largest property developers fell to the equivalent of $76.7 billion, down 28.4% from a year earlier and the 16th straight month of year-over-year declines, according to China Real Estate Information Corp., an industry data provider.

As foreign investors and home buyers lose confidence in China’s property market, developers are offering cars and pigs to boost sales. WSJ examines ads and policies to see how the country’s real estate turmoil could ripple out into the global economy. Photo composite: Sharon Shi

Now, with a new leadership team in place after the party congress—one packed with party members loyal to Mr. Xi—the top leader is moving toward a more concerted approach to shoring up the economy, part of a broader effort to brace for greater competition with the U.S.

“It seems that room for policy easing has widened post-party congress,” said

Larry Hu,

a Hong Kong-based economist at Macquarie. “After the impact of previous efforts turned out to be muted, policy makers are giving a big push now to get credit to flow to the property sector.”

Credit has been a particular headache for developers, since many had relied on heavy borrowing to build new projects and stay afloat. In the first nine months of this year, funds raised by China’s property developers dropped by 24.5%, according to data from the National Bureau of Statistics.

The new notice, jointly issued by the People’s Bank of China and the China Banking and Insurance Regulatory Commission, doesn’t represent a total reversal of Mr. Xi’s earlier efforts to tamp down exuberance in the sector.

‘Policy makers are giving a big push now to get credit to flow to the property sector.’


— Larry Hu, a Hong Kong-based economist at Macquarie

The notice, which has been billed as a package aimed at ensuring the sector’s “stable and healthy development,” still underlines the need to curb speculative real estate buying, repeating Mr. Xi’s mantra that “housing is for living in, not for speculating on.”

Under the new measures, developers’ outstanding bank loans and some types of nonbank credit due within the next six months can be extended for a year. Repayments on developers’ bonds can also be extended.

In addition, banks are encouraged to offer financing to unfinished housing projects and negotiate with home buyers on extending mortgage repayment, an apparent effort to help defuse growing resentment among those who have boycotted mortgage payments since the summer.

Banks are also encouraged to offer financing to support acquisitions of real-estate projects by financially sounder developers from weaker ones.

The new policies require financial institutions to treat state-owned developers and private developers equally, a measure that appears aimed at addressing banks’ reluctance to lend to private developers, according to

Yan Yuejin,

research director at Shanghai-based E-House China R&D Institute, a research firm.

“Regulators are making all-round efforts to target a soft landing for the property sector,” said

Bruce Pang,

chief China economist at Jones Lang LaSalle. Still, with the measures’ heavy skew toward improving liquidity for cash-strapped developers, he said, “these measures likely aren’t enough to avert the slowdown in the physical market.”

—Rebecca Feng contributed to this article.

Write to Lingling Wei at Lingling.Wei@wsj.com, Cao Li at li.cao@wsj.com and Stella Yifan Xie at stella.xie@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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More Than 130 People Dead in Cable Bridge Collapse in India’s Gujarat State

The Indian state government of Gujarat opened a criminal inquiry into the agency tasked with maintaining a historic cable bridge after the popular attraction collapsed on Sunday under the weight of hundreds of visitors, killing more than 130 people.

Harsh Sanghavi, the state’s home minister, told reporters that an inquiry under criminal provisions relating to manslaughter was opened into a local company. The bridge, which was built in the late 19th century, reopened to the public last week after months for repairs.

Mr. Sanghavi didn’t name the company. Several Indian news outlets reported that a local industrial company known as Oreva was in charge of the bridge’s maintenance and repairs.

Ashok Yadav, a senior official with the Gujarat state police, told reporters late Monday that nine people had been arrested in connection with the probe into the bridge’s collapse. The arrested people included two managers of the Oreva company, two ticket clerks at the bridge that collapsed, two bridge-repair contractors and three security guards tasked with regulating the entry of people on the bridge, according to Mr. Yadav.

Calls to Oreva weren’t answered on Monday and it didn’t respond to emails seeking comment.

Mr. Yadav said police could make more arrests as the inquiry continues.

“Our effort is to set a strong example through this whole process,” he said.

Rescue operations continued into Monday, with 170 people pulled from the waters of the Machchhu river that the bridge spanned, the state disaster management agency said.

Videos shared by television channels and on social media showed people in the water clinging to portions of the collapsed bridge and trying to climb out.

The death toll could continue to rise after a suspension bridge collapsed in the western Indian state of Gujarat, killing more than 130 people. The popular tourist attraction was crowded as hundreds of people visited the area to celebrate holidays including Diwali. Photo: AP Photo/Ajit Solanki

Tushar Daftary, a local member of Lions Clubs International community service group, who was among those helping with rescue operations last night, said many people were visiting family in the area due public holidays in the past week, including Diwali and Gujarati new year. That meant more people than usual visited the bridge over the weekend, according to Mr. Daftary.

A local news report said some visitors expressed concerns to ticket agents that some people were shaking the overcrowded bridge.

Videos posted on social media platform Twitter showed the bridge—which sways when people walk on it—thronged with visitors, some of whom appeared to be vigorously shaking its suspension cables. Users of

Meta Platforms Inc.’s

Facebook in India and outside the country, however, were unable to view posts with the Gujarat hashtag for several hours on Monday.

“Keeping our community safe,” a message said, when users clicked through to a page that would normally display a stream of videos, photos and news reports related to the state or the bridge collapse. It added that the posts were temporarily hidden as “some content in those posts goes against our Community Standards.”

“The hashtag was blocked in error,” a Meta spokeswoman said Tuesday, adding that it has since been restored.

She declined to say what material may have violated the platform’s standards, which don’t allow violent and graphic content, hate speech, and other types of material. India is Facebook’s largest market by users. Meanwhile, videos of Halloween revelers being crushed in South Korea over the weekend remained visible throughout Monday via a hashtag for the world Seoul.

After The Wall Street Journal sought comment from Facebook Monday, posts with the Gujarat hashtag became visible again, with the top post a video from an Indian TV network showing the moment the bridge collapsed.

The state has said it would award the equivalent of nearly $4,900 to families of those who died in the disaster, as well as give compensation to the injured. Indian Prime Minister

Narendra Modi,

who governed the state for more than a decade as he cemented his political rise, also unveiled compensation for victims and expressed his sorrow.

The tragedy cast a shadow over Mr. Modi’s three-day visit to the state that started Sunday, which is intended to showcase development projects ahead of elections there that are due later this year. The prime minister has been leading a renewed push to draw more factories to India and to create more jobs. In the hours before the bridge collapse, Mr. Modi presided over the start of construction on an aircraft manufacturing facility in the state in partnership with Europe’s Airbus SE, hailing it as a step forward for the country’s goal of becoming a global manufacturing hub.

But India’s efforts to attract more manufacturing and create more jobs have often faced challenges from concerns over the country’s dilapidated infrastructure and safety lapses, a worry that is likely to be made worse by Sunday’s disaster.

Write to Krishna Pokharel at krishna.pokharel@wsj.com and Tripti Lahiri at tripti.lahiri@wsj.com

Corrections & Amplifications
Harsh Sanghavi is the home minister for India’s Gujarat state. An earlier version of this article misspelled his surname as Sanghvi on second reference. (Corrected on Nov. 1)

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Russia Scrambles to Reconnect Supply Lines to Crimea After Bridge Explosion

Russian rockets slammed into the southeastern Ukrainian city of Zaporizhzhia overnight as Moscow raced to restore transportation links to Crimea after a major explosion damaged the bridge connecting the peninsula to the Russian mainland.

The strikes on Zaporizhzhia killed at least 17 people and injured 40 others, according to Anatoly Kurtev, president of the city council. Dozens of apartment buildings were damaged or destroyed, and the death toll was expected to rise, authorities said.

Zaporizhzhia, which is about 30 miles from the front lines where Ukrainian and Russian forces are fighting, has become a constant target of Russian shelling in recent days. On Friday, another rocket attack on a residential area also killed 17 people.

“The Russians are not able to respond on the battlefield and therefore hit the cities in the rear,”

Anton Gerashchenko,

an adviser to Ukrainian President

Volodymyr Zelensky,

wrote on Twitter Sunday morning.

Russian Defense Ministry officials didn’t immediately comment.

The weekend’s explosion on the 12-mile bridge that links Russia to Crimea did serious damage to a critical supply line that Moscow uses to move food and fuel to the peninsula, which it seized in 2014, and to support its troops fighting in southern Ukraine.

The bridge, opened by President

Vladimir Putin

to great fanfare in 2018, is also symbolically important—celebrated as a monument to the might of the Russian state and its aim of permanently holding on to the annexed Ukrainian territory.

Security footage shows a blast on the bridge connecting Crimea to Russia, a symbol of Moscow’s occupation of the peninsula. Russian officials blamed Kyiv, while Ukrainian officials welcomed the explosion but didn’t take responsibility. Photo: AFP/Getty Images

Officials in Moscow said transport links across the bridge were gradually being restored and that alternative means of moving essential supplies—such as ferry services—would be found.

Moscow blamed the damage on Ukraine. Kyiv hasn’t claimed responsibility for the attack, though Ukrainian officials have publicly celebrated the results of the explosion.

On Sunday, Russia’s Ministry of Transport said long-distance passenger and freight trains were again departing Crimea and crossing the bridge into Russia. Russian authorities didn’t say whether trains would begin moving from Russia into Crimea. Cars were also being permitted to cross the bridge, but it remained closed to trucks.

Russia also said it was restarting ferry service across the Kerch Strait separating Russia and Crimea to carry passengers and freight. Before the construction of the bridge, ferries were the main direct link connecting the two sides of the strait.

Experts said they were unsure whether the bridge remained structurally sound enough to support heavy vehicles.

A Ukrainian soldier stands on a destroyed Russian tank in Shakhtarsk, a city in eastern Ukraine’s Donetsk region.



Photo:

ZOHRA BENSEMRA/REUTERS

David MacKenzie, a senior technical director at COWI Holding A/S, a Denmark-based company that designs and builds some of the world’s largest and longest bridges, said it would take several months for Russia to be able to fully restore the damaged spans of the bridge.

Restrictions on truck and train traffic would likely remain because of concerns that the bridge’s substructure has been damaged, Mr. MacKenzie said.

The bridge explosion triggered outrage among some senior lawmakers, as well as ordinary Russians. But Russian state media sought to play down the event, refraining from calling it an attack and airing television interviews with cheerful train passengers expressing gratitude that service had been restored and voicing confidence in using the bridge.

The damage to the bridge will test the Russian military’s logistics, which are heavily reliant on rail transport and were already strained. Russian forces in southern Ukraine are trying to fight off Ukrainian counterattacks and hold on to territory they took in the first weeks of the war.

Ukraine, using long-range Himars rocket systems supplied by the U.S., has already disabled most bridges across the Dnipro River, which separates the Russian-occupied city of Kherson and its surroundings from other Russian-held territory.

Emergency workers extinguish a fire after a missile struck a house in the eastern city of Bakhmut.



Photo:

anatolii stepanov/Agence France-Presse/Getty Images

Ukraine has made steady progress in the region over the past month, though its advances have been slower than in the northeast, where it forces retook thousands of square miles of territory in just a few days last month.

On Saturday, Ukraine used Himars rockets to destroy a railway hub used by the Russian military in the southern part of the Donetsk region, which could have served as another resupply route to the occupied south.

The Institute for the Study of War, a Washington-based think tank, said the damage to the bridge wouldn’t permanently disrupt Russian supply lines, but is likely to cause significant problems in the short term.

“Russian forces will likely still be able to transport heavy military equipment via the railroad,” the institute wrote. “Russian officials will likely intensify security checks on all vehicles crossing the bridge, however, adding delays to the movement of Russian military equipment, personnel, and supplies to Crimea.”

Write to Ian Lovett at ian.lovett@wsj.com and Ann M. Simmons at ann.simmons@wsj.com

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U.S. will turn into a buyers’ housing marke in 2023, most experts say. Here’s where you’ll see the biggest declines.

Frustrated by the housing market? Housing experts say they’re expecting the market to tip back into buyers’ court by 2023, according to a new report.

Mortgage rates are approaching 7%, but home prices are only slowly coming back down and inventory is still tight compared to pre-pandemic levels.

Still, the U.S. housing market will shift in favor of home buyers by the end of 2023, 44% of 107 economists and housing experts polled by real-estate company Zillow for its Home Price Expectations Survey said. 

And 12% of these experts believed that shift will happen sooner — that is, this year.

Yet roughly 45% of experts surveyed by Zillow say buyers will have to wait, and expect the market to shift in buyers’ favor in 2024, and beyond.

All survey respondents said to expect home-price deceleration in 2023.

The U.S. housing market will shift in favor of home buyers by the end of 2023. That’s according to 44% of the 107 economists and housing experts surveyed by real-estate company Zillow.

And we’ve already seen some signs of price pressures manifesting: The median price of an existing home in the U.S. was $389,500 in August, down from $403,800 the previous month, the National Association of Realtors said.

Most of the housing experts surveyed by Zillow noted that the markets most likely to see home prices decline over the next year include pandemic boomtowns like Boise, Austin, and Raleigh; 77% of the experts surveyed expect declines in those cities. They saw a huge jump in sales amid the earliest days of the coronavirus pandemic.

Redfin, another real-estate brokerage company, also noted that Sun Belt home buyers are cancelling their home-purchase agreements at the highest rate as compared to the rest of the nation.

Most of the housing experts surveyed by Zillow noted that the markets most likely to see home prices decline over the next year include pandemic boomtowns like Boise, Austin, and Raleigh.

The markets least likely to see home prices decline over the next year include Midwestern cities like Columbus, Indianapolis, and Minneapolis, Zillow said. Only 36% of respondents expected home prices to decline in these areas over the next 12 months.

Some markets in the south are also expected to see demand hold strong, including Atlanta, Nashville, and Charlotte, the respondents added. Only 44% said declines in home prices were likely.

But for all potential buyers stuck renting as either mortgage rates or home prices makes buying a home unaffordable right now, expect rent growth to continue, Zillow said.

Zillow also expects rent growth to outpace inflation, stocks, and home values, over the next 12 months.

The typical home buyer’s monthly mortgage payment for a home priced at the median asking price has climbed $337 to $2,547 in the past six weeks alone, Redfin noted — a 15% jump.

That’s also up 50% from a year ago, when rates were at 3.01%.

Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com

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Home buyers are backing out of contracts in the Sun Belt, especially in Las Vegas, Phoenix, Tampa and Texas

The tide has turned, and buyers are now backing out of deals in the Sun Belt as rates rise and home prices remain unaffordable.

Once pandemic boomtowns, 15.2% of homes in cities in the Sun Belt that went under contract in August fell through, or roughly 64,000 homes nationwide saw deals dropped, a new report from real-estate brokerage Redfin Corp.
RDFN,
-5.33%
said.

A year ago, only 12.1% of home buyers were backing out of deals. Typically 12% of deals fell through prior to the pandemic, Redfin said. But the last time this number spiked — prior to this fall — was at the onset of the coronavirus pandemic in March/April 2020.

Buyers were most likely to back out of deals in the Sun Belt, the company added, in cities such as Phoenix, Tampa, and Las Vegas. Buyers were least likely to back out of purchases in big cities, including San Francisco and New York.

“A slowing housing market is allowing buyers to renege on deals because it often means they don’t need to waive important contract contingencies in order to compete like they did during last year’s home-buying frenzy,” Redfin noted.

Contingencies can include inspections to see if there’s any issues with the home, or whether they can get the mortgage required, or whether the appraisal is different from the agreed-upon amount.

‘A slowing housing market is allowing buyers to renege on deals.’


— Redfin

And “some buyers may also be backing out of deals because they’re waiting to see if home prices fall,” the company added.

More than a quarter of buyers looking to buy a home in Jacksonville, Fla. backed off in August, Redfin said, which is the highest percentage among the major 50 metro areas in the U.S. Las Vegas, Atlanta, and Orlando followed. (Top 10 list below)

These destinations were hotspots during the pandemic for buyers as they were affordable and in the era of remote-work.

But that’s changed.

“Sun Belt cities including Phoenix, Tampa and Las Vegas attracted scores of house hunters during the pandemic, driving up home prices,” Redfin said.

“Now their housing markets are among the fastest-cooling in the nation, giving buyers the flexibility to bow out,” they added.

Redfin analyzed Multiple Listing Services data going back to 2017 to analyze the drop-outs.

The share of buyers backing out of deals was the lowest in Newark, N.J., at 2.7%, followed by San Francisco, Nassau County, N.Y., New York City, and Montgomery County, Pa.

A big reason for the cancellations is high rates. The 30-year is at 6.29% as of Sept. 15. That’s up from 2.88% a year ago.

Homes are also still expensive. While existing-home prices are coming down, the median price of an existing home in the U.S. is still $389,500 in August, up 7.7% from a year earlier, the National Association of Realtors said.

‘I advise sellers to price their homes competitively based on the current market.’


— Sam Chute, a Miami-based real-estate agent at Redfin

With this tough backdrop of nervous buyers, “I advise sellers to price their homes competitively based on the current market,” Sam Chute, a Miami-based real-estate agent at Redfin said, “because deals are falling through and buyers are no longer willing to pay pie-in-the-sky prices.”

To be clear, the indigestion in the real-estate market was deliberately constructed: Home prices coming down as a result of higher rates and sellers reacting to lower demand is a “good thing,” Federal Reserve Chairman Jerome Powell said during a Wednesday press conference when they announced the rate hikes. 

“Housing prices were going up at an unsustainably fast level,” Powell said. 

“For the longer term, what we need is supply and demand to get better aligned, so that housing prices go up at a reasonable level …and that people can afford houses again,” he added. “The housing market may have to go through a correction to get back to that place.”

These are the top 10 cities where deals are falling through:

City Percentage of pending sales that fell out of contract
Jacksonville, Fla. 26.1%
Las Vegas, Nev. 23%
Atlanta, Ga. 22.6%
Orlando, Fla. 21.9%
Fort Lauderdale, Fla. 21.7%
Phoenix, Ariz. 21.6%
Tampa, Fla. 21.5%
Fort Worth, Tex. 21.5%
San Antonio, Tex. 21.1%
Houston, Tex. 20.6%

Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com

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Humana, CVS Circle Cano Health as Potential Buyers

Humana Inc.

HUM 0.67%

and

CVS Health Corp.

CVS 0.06%

are circling

Cano Health Inc.,

CANO 32.17%

according to people familiar with the situation, as healthcare heavyweights scramble to snap up primary-care providers.

The talks are serious and a deal to purchase Cano could be struck in the next several weeks, assuming the negotiations don’t fall apart, some of the people said. Cano shares, which had been down nearly 7%, turned positive and closed up 32% after The Wall Street Journal reported on the talks with Humana and other unnamed parties, giving the company a market value of roughly $4 billion.

Bloomberg subsequently reported CVS’s interest.

It couldn’t be learned which other potential buyers might be in the mix, but Cano could be Humana’s to lose as the health insurer has a right of first refusal on any sale, part of an agreement that was originally struck in 2019.

Miami-based Cano operates primary-care centers in California, Florida, Nevada, New Mexico, Texas, Illinois, New York, New Jersey and Puerto Rico, according to documentation from the company. It mainly serves Medicare Advantage members, a private-sector alternative to Medicare for seniors.

Ties between the companies run deep: Cano was Humana’s biggest independent primary-care provider in Florida, serving over 68,000 of its Medicare Advantage members at the end of last year, according to a securities filing. Cano also operated 11 medical centers in Texas and Nevada for which Humana is the exclusive health plan for Medicare Advantage, the filing added.

Humana has already established a footprint in primary care, which it continues to expand. Earlier this year, its CenterWell Senior Primary Care business joined with private-equity firm Welsh, Carson, Anderson & Stowe to open about 100 new senior-focused primary-care clinics between 2023 and 2025, building on an earlier, similar partnership.

At its investor day last week, Humana’s chief executive,

Bruce Broussard,

said that the company sees a total addressable market of over $700 billion in “value-based” primary care for seniors. He noted that Humana has accelerated its investment in the sector over the past five years, becoming the nation’s largest senior-focused primary-care provider.

There has been a frenzy of deal making involving large companies scooping up primary-care assets as a means of getting closer to patients and providing them more personal service.

Amazon.com Inc.

agreed to purchase the parent of primary-care clinic operator One Medical for about $3.9 billion in July, while CVS Health Corp. agreed to buy

Signify Health Inc.

for $8 billion earlier this month.

Cano went public in 2020 through a special-purpose acquisition vehicle backed by real-estate investor

Barry Sternlicht,

who sits on its board. The deal valued the company at $4.4 billion.

Cano has been the target of two shareholder activists this year, both of which independently pushed for its sale.

Dan Loeb’s

Third Point LLC currently has a roughly 5% stake in the healthcare company. In March, he pointed to the market’s unfavorable view of companies that went public through SPACs as a reason to explore strategic alternatives.

Then in late August, Owl Creek Asset Management LP sent a letter to Cano’s board stating that it had amassed a roughly 4% stake and urged the company to hire investment bankers to explore a sale to a strategic buyer.

Cano has been backed by health-care-focused private-equity firm InTandem Capital Partners since 2016. The firm mainly makes investments in small-to-midsize companies.

Write to Laura Cooper at laura.cooper@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the September 23, 2022, print edition as ‘Humana, CVS Target Cano Health.’

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U.S. Home Sales and Prices Fell in August as Mortgage Rates Rose

The U.S. housing market slowed for a seventh straight month in August, the longest stretch of declining sales since 2007, as higher mortgage rates continued to undercut buyer demand.

Home sales look poised to decline further in the coming months, economists say, as mortgage rates recently topped 6% for the first time since 2008, when the U.S. was in a recession. Many first-time buyers have been priced out of the market, and existing homeowners are opting to stay put rather than give up their current low rates.

“As long as mortgage rates remain elevated, sales will remain depressed,” said

Daryl Fairweather,

chief economist at real-estate brokerage

Redfin Corp.

The decrease in home sales is rippling through the economy. Consumers are spending less on housing-related items such as furniture and appliances, while construction of new single-family homes has also slowed.

Sales of previously owned homes dropped 0.4% in August from July to a seasonally adjusted annual rate of 4.8 million, the weakest rate since May 2020, the National Association of Realtors said Wednesday. August sales fell 19.9% from a year earlier.

The housing market has softened in recent months as the Federal Reserve aggressively raises interest rates to cool the economy and bring down high inflation. The Fed approved raising its benchmark federal-funds rate by 0.75 percentage point Wednesday.

The Fed’s interest-rate moves have led to higher mortgage-interest rates and increased borrowing costs for home buyers by hundreds of dollars a month, pushing many out of the market. The average rate on a 30-year fixed-rate mortgage was 6.02% in the week ended Sept. 15, up from 2.86% a year earlier, according to housing-finance agency

Freddie Mac.

The pandemic-fueled housing market activity in mid-2020 when many Americans moved to larger houses with more outdoor space while spending greater time at home. Bidding wars were widespread, and homes were often snapped up in a matter of days.

The recent increase in mortgage rates is expected to further weigh on home sales this month and next. Homes typically go under contract a month or two before the contract closes, so the August data largely reflect purchase decisions made earlier in the summer. Mortgage rates rose to 5.81% in June, then pulled back for much of the summer.

Economists have long said that renting and investing in the stock market is a better investment than owning a house, and in 2022 that could be especially true. WSJ’s Dion Rabouin explains. Photo illustration: Elizabeth Smelov

The drop in demand is reducing buyer competition, and home-price growth has slowed from last year’s rapid pace. But prices remain above where they stood a year ago, because the number of homes for sale is still below normal levels.

The median existing-home price rose 7.7% in August from a year earlier to $389,500, NAR said. Prices fell month-over-month for the second straight month after reaching a record high of $413,800 in June. While prices typically decrease in the late summer, the monthly declines have been bigger than normal, said

Lawrence Yun,

NAR’s chief economist.

The combination of high prices and rising interest rates has pushed home-buying affordability near its lowest level in decades. General economic uncertainty is also keeping buyers on the sidelines, said Odeta Kushi, deputy chief economist at

First American Financial Corp.

“To make the biggest financial decision of your life, you need to have some confidence in the economy, in your job, in the labor market,” she said.

Consumer sentiment toward the housing market fell in August to the lowest level since 2011, according to

Fannie Mae.

Many buyers rushed to purchase in the first few months of the year, because they expected mortgage rates to rise, reducing the number of buyers left in the market today, said Redfin’s Ms. Fairweather. “We’re experiencing an especially cold fall and winter, because the spring was so hot,” she said.

Philip Natale went under contract to buy a new home in Henderson, Nev., in December. By the time he locked in an interest rate this spring, rates had climbed from around 3% to above 5%, pushing up his monthly payment by several hundred dollars.

Philip Natale, with his mom, Michelle, in hat, says rising interest rates pushed up his monthly payment on a new Henderson, Nev., home. Charlie and Ashley Richards bought their first home in Charleston, S.C., in September. Philip Natale; Sandra Dawson

“It’s horrible,” he said, but he hopes to refinance the loan at a lower rate within the next year or two. “The first 12 to 18 payments are probably going to be a big bummer,” he added.

To save on costs, Mr. Natale is eating out less and has decided to delay buying a car. “I just don’t want to feel the stress of adding a car at the same time as I’m buying a home,” he said.

In the four weeks ended Sept. 11, 7.2% of homes on the market each week had a price drop, up from 3.8% a year earlier, according to Redfin. Homes on average sold for 0.5% below their final list price, compared with 1.1% above list price a year earlier.

Nationally, there were 1.28 million homes for sale or under contract at the end of August, down 1.5% from July and unchanged from August 2021, NAR said.

“Home-price growth is likely to continue to decelerate,” Oxford Economics—which forecasts that existing-home sales will fall further through the end of the year—said in a note to clients. “But the limited supply of homes for sale will likely prevent too steep a decline.”

Charlie and Ashley Richards, who are both 29, started shopping for the first home in Charleston, S.C., in June after they found out their rent was going up by $800 a month. 

“We got into the market at the right time. Stuff was starting to slow down a bit,” Mr. Richards said. “There were a handful of houses that we looked at that had been on the market for 30 to 60 to even 90 days.”

They bought a house this month for about 3% below the asking price. “I’m very excited,” Mr. Richards said.

Write to Nicole Friedman at nicole.friedman@wsj.com

The new home market, which accounts for about 10% of home sales, has also shown signs of weakness. A measure of U.S. home-builder confidence fell for the ninth straight month in September to the lowest level since May 2020, the National Association of Home Builders said this week. About one-fourth of builders surveyed said they had reduced prices in the past month, NAHB said.

Residential permits, which can be a bellwether for future home construction, also fell 10%, though housing starts rose 12.2% in August from July, the Commerce Department said this week.

News Corp,

owner of The Wall Street Journal, also operates Realtor.com under license from NAR.

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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‘An increasing squeeze on list prices.’ 3 top economists and real estate pros on the housing markets where home prices will drop the most this year

Some markets may be more vulnerable to home price cuts than others, pros say.


Getty Images

Buyers in some markets are already getting — or may soon get — some relief in the form of lower home prices, pros say. Already, in the last 4 – 8 weeks, experts have noticed downward price pressure in higher priced markets that were previously robust. (See the lowest mortgage rates you may get now here.) “These were markets where the median sale-to-list price ratio was running well in excess of 5% above list price, and examples include San Francisco, San Jose, Austin, Denver and Seattle,” says Chris Stroud, co-founder and chief of research at HouseCanary, a technology-powered national brokerage that provides residential real estate analytics.

All of the cities listed above experienced a pretty quick decline in their respective median closing prices during July and August as buyers no longer had to get into bidding wars or make offers above asking to be competitive. “Median closing prices have largely stabilized in these markets for the most part over the last few weeks now that excesses have been worked out of the system,” says Stroud. 

The markets with the highest share of price cuts in Realtor.com’s July data are mostly clustered in the Sun Belt and include Las Vegas, Phoenix, Austin, Sacramento, Denver, Portland, Dallas-Fort Worth, Nashville, Tampa and San Diego.

See the lowest mortgage rates you may get now here.

Where will we see home price cuts in the future?

Those same markets may see more declines, says Realtor.com’s senior economist George Ratiu. “As we look toward the next few months of rebalancing, we can expect these markets to feel an increasing squeeze on list prices, as seasonal trends take deeper root and buyer traffic waves from summer’s peak.”

For their part, a team of Goldman Sachs strategists said that metro areas in the west are more likely to see a price correction, and that’s “especially true for markets with low levels of housing affordability, such as Seattle, San Diego and Los Angeles.”

Longer term, price decreases will depend, in part, on where inventory increases quickly and excessively in conjunction with suppressed demand due to interest rates, experts say. “Going into the rate increase period, the majority of markets were experiencing record low inventory. This environment has so far prevented large price declines in many areas across the country,” explains Stroud, who notes that that may change.

See the lowest mortgage rates you may get now here.

Markets that saw an especially large influx of out-of-staters — places like Boise, Denver and Salt Lake City — may be more vulnerable to price drops as the shift to remote work is largely complete, says Kate Wood, home expert at NerdWallet. “It’s a double whammy for home sellers as the influx of deep-pocketed out-of-staters dries up and many local residents are now priced out. With home prices remaining high, these markets are still far from buyer-friendly, but sellers probably shouldn’t expect the bidding wars and zero-contingency offers that proliferated over the last two years,” says Wood. 

As housing markets are pulling back in the wake of higher mortgage rates, prices and inflation, some of these markets are finding they have a growing volume of lingering inventory and not enough buyers, says Ratiu. “For homeowners who are motivated to sell, the answer is increasingly an old-fashioned one – price cuts. Even as median list prices continue to advance—the result of homeowners pricing properties based on market data from months ago—growing inventory and shrinking buyer traffic are starting to put downward pressure on prices,” says Ratiu.

The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.

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