CHM Blog

The housing market's ‘Godfather’ moment

“Leave the gun. Take the cannoli,” is a memorable line used by the character Clemenza in The Godfather. Sometimes it’s the little things when all is said and done, and in real estate reality what might seem like a small thing isn’t. Such as the latest sign of improvement in pending home sales.

Pending home sales is a gauge of future home sales based on contract signings, and Realtor Magazine’s Melissa Dittman Tracey tells us that the figure rose 2.2% month over month in November, citing the National Association of REALTORS® reports. “Marking the fourth consecutive month of increases, contract signings are up nearly 7% from a year ago and are at their highest level since February 2023,” says Tracey.

“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” says NAR Chief Economist Lawrence Yun. “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”

Recent housing indicators that have painted a healthier picture of the market include existing home sales jumping 5% in November, the median home price climbing 4.7% year over year, the number of existing homes on the market being up nearly 18% from a year ago, and new-home construction for single-family homes rising 7% annually in November.

Still, “some markets will outperform, driven primarily by local job gains and the flow of new inventory supply,” Yun says.

Tracey also reports that contract signings were up annually in all four major regions of the U.S. in November. Three posted a monthly uptick, with the South winning the race (pending home sales up 5.2%). The Northeast was the only region to post a decline, with pending home sales falling 1.3% month over month. However, contract signings are still up in the region by nearly 6% compared to a year ago, NAR’s report shows.

All good signs that there is no need to “go to the mattresses” as the new year begins. And that those cannoli are beginning to taste better and better.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market worsened by -2 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Jobs, 2) The Fed and 3) Treasury Auction.

1) Jobs: We have a big week for job and wage related data with ISM Services, JOLTS, ADP and more that culminates with Big Jobs Friday where we get the Unemployment Rate, Non Farm Payrolls and Average Hourly Earnings. The bond market will be very sensitive to the hourly earnings.

2) The Fed: We have a very busy week for Fed speak as the bond market is looking to find a bottom.

01/06 Cook

01/08 Waller, FOMC Minutes

01/09 Harker, Schmid, Bowman

3) Treasury Auction: We kick off 2025 with our first auction. The bond market will be most reactive to Thursday's 30Y bond auction.

01/07 3 year note

01/08 10 year note

01/09 30 year bond

This Week's Potential Volatility: High

This morning markets are trading within a narrow channel. Volatility has started at moderate levels and will increase later in the week as more data comes in.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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