September – U.S. Single-Family Home Prices Slows October – Single-Family Home Sales Picks Up, November – Mortgage applications still down despite falling rates

Single-Family Home Sales

Single-Family Home Sales Pick Up In October

Despite continuing high mortgage rates and home prices, sales of new single-family homes in the U.S. increased in October.

According to the most recent report from the Commerce Department, new home sales increased 7.5% in November to a seasonally adjusted annual rate of 632,000 units. The number of units sold in September decreased from the previously stated 603,000 units to 588,000 units.

Analysts surveyed by The Wall Street Journal predicted a 5.5% decline in new-home sales. This is only one month of data, so it’s still too early to declare that this might signify a market turning point.

Compared to September, the median sales price of new homes sold in October increased to $493,000 from $455,700. According to the Commerce Department, that is a 15.4% increase from a year ago. There were also 1.5% more new residences available for purchase. At the present sales rate, that translates to an 8.9-month supply. From a 5.7-month pool in January, this is an increase and far above the anemic inventory that existed in 2020 and 2021.

Regionally, the Northeast and the South saw the most significant sales increase. According to the survey, sales decreased in the South and the Midwest.

U.S. Single-Family Home Prices Slow Again In September

According to highly watched surveys released Tuesday, demand for single-family homes in the U.S. decreased in September due to increased mortgage rates.

In September, the S&P CoreLogic Case Shiller national home price index fell 0.8% month over month. For the first time since late 2018, monthly home prices declined in July.

After increasing by 12.9% in August, home price growth slowed in September to 10.6%. Aggressive Federal Reserve interest rate increases intended to lower high inflation by reducing economic demand have severely harmed the housing market.

Freddie Mac data showed that the 30-year fixed mortgage rate crossed the 7% threshold in October for the first time since 2002. Even while the rate dropped back to 6.58% on average last week, it is still significantly higher than the 3.10% average for the same time the previous year.

As the Fed continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable,” Craig Lazzara, managing director at S&P DJI, said in a statement. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”

According to data released this month, the sales of previously owned homes saw their ninth consecutive monthly dip in October. Single-family homebuilding and permits for future construction sank to their lowest levels since May 2020.

According to a Federal Housing Finance Agency study, home prices increased 0.1% every month in September after falling 0.7% in August. Prices rose 11.0% over the previous 12 months, following an increase of 12.0% in August.

MBA Weekly Survey Nov. 30, 2022: Applications Down Despite Falling Rates

As per Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending November 25, mortgage applications decreased for the first time in three weeks despite interest rates falling below 6.5%. The outcomes for the week have been modified to account for the Thanksgiving holiday.

On a seasonally adjusted basis, the Market Composite Index decreased by 0.8% from the prior week, while the unadjusted Refinance Index dropped 13%. Both metrics had fallen to their lowest points since 2000. Refinance applications comprised 26.1% of all mortgage activity, down from 28.4% the week before.

However, purchase applications rose. The seasonally adjusted Purchase Index went up 4% over the previous week. 

The proportion of FHA applications dropped from 13.4% the week before to 12.2% overall. The ratio of V.A. applications climbed from 10.5% to 11.2% the previous week. The USDA’s percentage of all applications dropped from 0.6% the last week to 0.5%.

Mortgage rates also decreased for the majority of other loan types.

Next week’s potential market-moving reports are:

  • Monday, December 5th – ISM Services Index
  • Tuesday, December 6th – Trade Deficit 
  • Wednesday, December 7th – Productivity, Unit Labor Costs, Consumer Credit
  • Thursday, December 8th – – Initial and Continuing Jobless Claims
  • Friday, December 9th – Consumer Sentiment Index, 5-Year Inflation Expectations   

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.