Blog posted On October 25, 2019
Mortgage rates did not move significantly this week ahead of next week’s Federal Open Market Committee (FOMC) meeting. Existing home sales declined in September. Both new purchase and refinance mortgage application submissions are down. New home sales also declined.
Existing home sales or resales declined in September, down 2.2% month-over-month to a seasonally-adjusted annual pace of 5.38 million. Annually, however, sales are up 3.9%. Home buyers are facing limited inventory, and in many metros, that’s pushing home prices up. The median sales price of a previously constructed home increased 5.9% annually and at September’s sales pace it would take just 4.1 months to exhaust available inventory. A 6-month supply is considered a balanced housing market.
With historically low mortgage rates for the past couple of months, both homeowners and home buyers are becoming more rate sensitive. Although mortgage rates have not moved drastically the past week, some sources reported a slightly upward trend. New purchase mortgage application submissions declined 4.0% and refinance mortgage application submissions declined 17.0% for a composite decrease of 11.9%.
New home sales declined in September, down 0.7% month-over-month to a seasonally adjusted annual rate of 701,000 units. Year-over-year, however, sales improved 15.5%. New home sales tend to be more volatile than the larger share of existing home sales.
Approximately 65% of homes purchased in September were either under construction or not yet built, suggesting home buyers are buying new. In many metros, lack of available homes for sale has creative competitive markets. Home builders are working to replenish housing inventory.