Blog posted On October 26, 2018
Mortgage rates did not move significantly this week. The Federal Housing Finance Agency (FHFA) released its house price index and indicated home price appreciation has started to slow. New home sales declined, but the pending home sales index recovered.
The FHFA housing price index appreciated 0.3% month-over-month in August, and July’s increase was revised upward to a rate of 0.4%. Annually, the index is up 6.1%. Overall, home price appreciation has gradually started to slow down. A competitive market has put upward pressure on home prices over the past few years, but the heated market may finally be cooling off.
New home sales, or the sales of newly constructed homes, declined 5.5% month-over-month and 13% year-over-year to a seasonally adjusted annual rate of 553,000. Based on September’s data, it would take 7.1 months to exhaust all available inventory, a relief after months of inventory constraints. Danielle Hale, chief economist at Realtor.com, commented, "instead of taking advantage of reduced competition in the fall, buyers seem to be hibernating, marking an earlier end to the home buying season than we've seen in recent hotly competitive years.”
The pending home sales index rebounded in September, rising 0.5% month-over-month to a reading of 104.6, good news for next month’s existing home sales and new home sales forecasts. Monthly gains were driven by activity in the West, with signed contracts up 4.5% annually. The Midwest also increased, up 1.2% year-over-year. The Northeast was down 0.4% month-over-month and the South as down 1.4% year-over-year.
Home buying and selling activity tends to slow down in the fall and winter months, but that may be good news if you are looking for a home to buy. Sellers may need to lower prices or offer concessions to stay competitive in a slower market. If you are planning on buying a home before the end of the year, get preapproved for mortgage financing before you start shopping. Mortgage preapproval now can help ensure a faster transaction later.