Strong Economic Data Affect Mortgage Rates
During a light week for economic reports, investors continued to focus on the stronger than expected data released earlier in the month. Since faster economic growth increases the outlook for future inflation, mortgage rates ended last week a little higher.
Home Sales Mixed
In September, sales of existing homes fell a little from August, as expected, to the lowest level since October 2010. The median existing home price of $404,500 was up 3% from last year at this time. Inventories remain stuck at historically low levels, standing at just a 4.3-month supply nationally, far below the 6-month supply typical in a balanced market. From a different perspective, though, inventories were 23% higher than a year ago.
New Home Market Shows Promise
Sales of previously owned (existing) homes currently account for about 85% of the market, and sales of new homes make up the remaining 15%. In September, new home sales rose 4% from August and were 6% higher than a year ago. The median new-home price of $426,300 was up slightly from last year at this time. In contrast to existing home sales, which measure closings during the month, new home sales are based on contracts signed, so they are a leading indicator of future housing market activity.
Builder Confidence Improves
The headline figure for overall housing starts in September showed the expected slight decline from August, but the details of the report were more encouraging. The weakness this month was entirely due to multi-family units, while single-family housing starts rose 3% to the highest level in five months. Single-family building permits, a leading indicator of future construction, also increased in September. In addition, a separate survey of home builder sentiment on housing market conditions from the NAHB rose more than expected.
Mortgage Rates for the week of 10-28-2024