Market Recap: Existing Home Sales Surge, New Purchase Apps Up, Refinance Apps Down
Mortgage rates did not move significantly during this short week. Markets were closed on Thursday in observance of Thanksgiving, and the New York Stock Exchange is closing early today. Existing home sales improved month-over-month, but decreased year-over-year. New purchase mortgage applications increased and refinance mortgage applications declined. The consumer sentiment index eased slightly.
Existing home sales exceeded expectations in October, climbing 2.0% month-over-month. Every region posted gains, especially the South, which makes up most of the sales market. Year-over-year, however, sales are down 0.9%. Inventory constraints continue to hurt housing market activity. The National Association of Realtors reported there were approximately 1.8 million homes for sale in October, down a solid 10.4% year-over-year, a 3.9-month supply, the lowest level since 1999.
The Mortgage Bankers Association’s (MBA) weekly mortgage application survey showed a 5.0% increase in new purchase applications and a 5.0% decrease in refinance applications for a composite increase of 0.1%. With mortgage rates trending slightly upward this year, any slight increase is leading to a pullback in refinance applications.
The University of Michigan consumer sentiment index is a survey of 500 households across the country. Consumer perception is used to predict future consumer spending activity. After hitting a seven-month high in October, consumer sentiment has dropped three points to a level of 98. This figure is up slightly from November’s first reading of 97.8. Based on this data, consumer spending is expected to rise about 2.7% in 2018. Consumer spending accounts for two-thirds of economic activity.
The Federal Open Market Committee will meet once more in December and is expected to raise rates for the third time. Though mortgage rates are still historically low, limited housing inventory has led to rapid price appreciation in many metros across the country.
Sources: Bloomberg, CNBC, CNBC, CNBC, Mortgage News Daily