CHM Blog

An inventory surge running out of steam

Jake Krimmel's latest housing market analysis from Realtor.com is not one to evoke smiles and hope for the near future. It reveals a story of contradictions and regional divides that are on trend to reshape the American real estate market.

While buyers have more homes to choose from than they've seen in years, they're increasingly hesitant to pull the trigger—even as mortgage rates have fallen to 12-month lows. For the 24th consecutive month, active listings climbed, keeping inventory above the one million mark for the sixth straight month. But here’s the rub: growth is slowing. After peaking at 31.5% growth in May, the pace has decelerated steadily each month since. Our post-pandemic inventory recovery appears to be hitting a wall.

The regional picture tells an even more nuanced story. The West and South saw inventory jumps as much as 17.4%, while the Midwest gained 12.2%, and the Northeast just 8.9%. Washington, DC led all major metros with a striking 38.2% increase, followed by Charlotte and Las Vegas. When compared to pre-pandemic norms, the West and South actually sit above historical levels, while the Midwest and Northeast remain deeply underwater.

Despite falling mortgage rates, buyer enthusiasm remains lackluster. With homes sitting on the market for 5 days longer than last year, we now mark the 19th consecutive month of slower sales.

Supply and demand rules remain alive and well. Perhaps the best news is that prices have largely plateaued. The national median list price edged up to $424,200, but regional differences are stark: prices are falling in the South and West while climbing in the Northeast and Midwest, reflecting varying dynamics across the country.

Adding another layer of unsurprising uncertainty, the federal government shutdown that began October 1st appears to be dampening activity in metros with high concentrations of federal employees. Early data from Realtor.com shows dips in new listings as well as buyer searches in Washington, DC, Virginia Beach, Oklahoma City, and Baltimore. While the impact remains modest for now, Krimmel notes that if the shutdown persists, these markets could face longer-term headwinds as paycheck uncertainty takes its toll on both homebuyer and seller confidence.

The takeaway? America's housing market is catching its breath after years of pandemic-fueled volatility, but the recovery looks very different depending on where you live.

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 under pressure today. The MBS market worsened by -12 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

These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Institute for Supply Management reports and 3) Central Banks.

First thing, Geopolitical:

The U.S. Government is still shutdown. We also have the Supreme Court hearing arguments this week on Tariffs.

Second thing, Institute for Supply Management reports:

Since we will NOT have any government jobs data this week, the private Institute for Supply Management Manufacturing and Services reports will get a lot of attention. Their Employment and Prices Paid indexes will serve as proxies for jobs and inflation reports.

Third thing, Central Banks:

The Bank of England is the next up for global banks' Interest Rate Decisions and Policy Statements.

The Federal Reserve: There will be Fed speakers almost every day this week. They likely will not say anything to upset markets.

This Week's Potential Volatility: High

This morning markets have started under pressure. Volatility has started at moderate levels but could increase to high on the geopolitical issues this week.

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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