Economy

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The housing market has been struggling most of the year, part of it is rising interest rates. US MBA reported mortgage applications grew +4.9% vs -7.1% the prior week as mortgage rates hit a 7 year high. Was this borrowers fearful of higher rates? New home sales fell 5.5% on the month.

30 year Mortgage rate

The Mortgage Bankers Association reported Wednesday for the week ending 19 October 2018 that mortgage applications rose +4.9%, a big change from down 7.1% the week prior.

This reports are notoriously volatile but still that is a big shift. The purchase index rose to 228.4 from 224.0 prior and the market index rose to 337.8 from 322.1 prior.

The big jumps were in the refinancing index 919.6 from 838.1 and 30-year mortgage rate continued to rise with the rise in  US bond yields to 5.11% from 5.10% prior  This is the highest rate in seven years. The rush in refinancing suggests locking in the these rates before even higher rates to try and temper borrowing costs in the US.

Federal Housing Finance Agency August House Price Index

Later in the day we got more housing data firstly the Federal housing finance agency released its August house price index, which is old data given the rate rises since but the most cuurent apparently. The index was 0.3% as expected. The prior month was revised higher to 0.4% from 0.2%.  From August 2017 to August 2018, house prices were up 6.1 percent.

For the nine census divisions, seasonally adjusted monthly price changes from July 2018 to August 2018 ranged from -0.7 percent in the Middle Atlantic division to +0.8 percent in the Pacific division. The 12-month changes were all positive, ranging from +4.0 percent in the Middle Atlantic division to +8.4 percent in the Mountain division.

FHFA Price Index Aug

New Home Sales for September

Today we also saw September new home sales came in much weaker than expected at 553K way under the 625k expected. Even worse the prior month was revised down to 585K from the 629K previously released.

United States New Home Sales

These are the lowest levels seen since December 2016. Interest rates are biting as are other costs like gasoline. Not a surprise as this was indicated by the different home builders earnings reports and guidances. This highlights the divergence between central bankers, reality and main strreet.

Highlights

  • Single-family home sales fell -5.5%
  • Medium sales price decreased 3.5% year on year to $320,000
  • Average selling price at $377,200
  • Supply of homes a current sales rate rose to 7.1 months. The highest since March 2011 up from 6.5 months in August.

From the TradersCommunity Research Desk

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