2014 was a disappointing year for US housing, according to Northern Trust, which reported that combined sales of new and existing homes fell 2.7% last year, reflecting a nearly flat reading for new home purchases and a dip in sales of existing homes. The retreat came in spite of mortgage rates that were exceptionally low. Sales of high-end properties moved ahead most briskly, while those in the middle moved more slowly. 

One reason for this outcome was the tapering of investor purchases of homes in foreclosure, which were eventually turned out for rental. These ‘distressed transactions’ have fallen to only 11% of total sales from a peak of 49% in 2009. This has left real estate agents waiting for local buyers to re-enter the market, but they have yet to do so. 

The direct impact of housing activity is reflected in the residential investment expenditure component of gross domestic product (GDP). The 2014 share of residential investment expenditure in GDP was 3.1%, well below the 6% peak in 2005 and the 5.2% average over the past 50 years. Construction of new homes increased in 2014, but largely in multi-family units.