Market Recap: Existing Home Sales Surge, New Home Sales Rebound, and FHFA House Price Index
Mortgage rates trended downward this week. New home sales and existing home sales each showed signs of strength and the Federal Housing Finance Agency (FHFA) house price index increased. New Treasury Secretary Steve Mnuchin addressed Fannie Mae and Freddie Mac reform is on the agenda but stated that it was not the number one priority.
Existing home sales or resales account for the largest share of housing market activity. Resales surged in January to a pace of 5.69 million units, reaching a 10-year high, up 3.3% month-over-month and are 3.8% higher than last year. Every region showed growth except for the Midwest, down 1.5%. Tightened inventory is putting a constraint on the market, available homes are down 7.1% from last year.
New home sales measure the sale of newly constructed homes. New home sales posted solid gains in January, increasing 3.7% month-over-month and 5.5% year-over-year at a pace of 555,000. The reports show that housing demand remains strong, despite rising rates and higher prices.
The FHFA home price index tracks changes in the value of homes financed through conventional mortgages backed by Fannie Mae and Freddie Mac. The FHFA home price index does not include government-insured loans like FHA or VA loans. In December, the FHFA home price increased 0.4%. Homeowners are building equity more rapidly as their home values increase.
Mortgage rates dropped slightly this week, but did not change significantly. In March, the Federal Open Market Committee will meet on the 14-15 to vote on raising the benchmark interest rate. Forecasters have mixed predictions about the chance of a rate hike at this meeting.
Sources: Mortgage News Daily, Bloomberg, Economic Calendar, HousingWire, MarketWatch, Reuters