Market Recap: No Rate Hike, New Home Sales and Pending Home Sales Decline, Home Price Appreciation Steady
Posted On January 31, 2020
As expected, the Federal Open Market Committee (FOMC) voted to leave the Federal benchmark interest rate unchanged. As a result, mortgage rates trended slightly lower this week. New home sales dipped, after gains the previous month. Home price appreciation was steady. Pending home sales unexpectedly fell.
New home sales, or the sales of newly constructed homes, unexpectedly declined in December, down 0.4% month-over-month to a seasonally adjusted annual rate of 694,000. Although construction activity has picked up and home builder sentiment was positive, new home sales missed expectations. New home sales data can be volatile from month to month.
The Case-Shiller home price index appreciated 0.1% month-over-month and just 2.6% year-over-year in November. All metros experienced annual gains, particularly the Mountain States. Leading metros were mixed. Phoenix led gains with a 5.9% annual increase, followed by Charlotte up 5.3% and Tampa up 5%. Housing professionals expect home price appreciation to continue to slow down in 2020, after years of rapid appreciation, giving many buyers a much-needed break.
Pending home sales, or the number of homes that are under contract but not yet closed, declined in December, down 4.9% month-over-month. Each region saw a decrease, the South fell 5.5%, the West dropped 5.4%, the Northeast saw a 4% decrease, and the Midwest was down 3.6%. The data may have been affected by a typical end of year slowdown or may reflect the lack of homes available for sale. Chief economist for the National Association of Realtors (NAR), Lawrence Yun, predicted, “the state of housing in 2020 will depend on whether home builders bring more affordable homes on the market. Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”
The FOMC did not move interest rates on Wednesday, and in its statement expects little to no change economically into 2020. Average mortgage rates are sitting at least a full percentage point lower than they were last year, according to Mortgage News Daily. Many home buyers and homeowners looking to refinance could benefit from locking in today’s low mortgage rates. If you have any questions about a home purchase or refinance, let us know!