CHM Blog

The housing market’s great divide

Whether they want them or not, today’s homebuyers are finally getting some answers. They just may not be the ones they might have expected. After years of being told they “can’t handle the truth” of sky-high prices and vanishing inventory, the tables have taken what might be referred to as a half-turn. Call it a more nuanced reality. And it’s one that varies dramatically depending on a number of factors.

For the 23rd consecutive month, active listings have climbed, rising 17% compared to last year. Good news? For many buyers it is. But before anyone breaks out the bubbly, consider that we are still nearly 14% below where we were before the pandemic. What’s more, that steady growth we celebrated all summer has begun to dwindle as fall arrives.

To get a handle on this, we must zoom in on different corners of the country. The South and West have bounced back above their pre-pandemic inventory levels and continue adding supply. Cities like Denver and Austin are taking names, with housing stock well above their historical norms from 2017 to 2019. But the Northeast and Midwest aren’t so lucky, remaining deeply undersupplied. Metros like Hartford and Chicago are trailing furthest behind their pre-pandemic baselines. It’s as if two entirely different housing markets exist within the same country.

In much of the U.S., homes are just sitting there. The typical property now sits on the market for 62 days—a full week longer than this time last year. Florida and Las Vegas lead the slowdown, with listings in these once-hot markets spending the most time waiting for that one buyer to walk through the door.

Pricing-wise the national median list price held steady at $475,000. However, that stability masks significant regional movement. The West saw prices dip 3.6%, while the Northeast and Midwest are experiencing per-square-foot price increases, and the South and West are seeing declines. Another split along geographic lines.

A big tell is what’s happening with price cuts. Nearly 1 in 5 listings saw reductions in September, with sellers in the $350,000 to $500,000 range most likely to lower their asking prices. Think about it. These aren’t luxury sellers testing the waters; they’re homeowners who need to move and are willing to negotiate. Luxury home sellers, by contrast, are remaining patient, with price reductions least common at the top end. They wait because they can.

Falling mortgage rates? Easy to forget about that element as the market’s pace continues to decelerate. The good news, however, is that we now have a housing landscape offering buyers more negotiating power than they’ve enjoyed in years. It just depends on your zip code.

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 improved by +18 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) The Fed and 3) Treasury Auction.

Geopolitics update:

Markets now expect the Government shutdown to continue through the rest of the week. In the absence of economic reports usually provided by the Government, markets will be focused on private research reports, Federal Reserve speakers and Treasury Auctions.

Federal Reserve Update:

The Fed shows increasing divide on how to proceed forward. There will be Fed speakers every day this week.

Treasury Update:

The US Treasury will have auctions on Tuesday, Wednesday and Thursday with extra attention being paid to the Thursday auction.

This Week's Potential Volatility: High

This morning markets started under a little pressure but are now back to sideways levels. Volatility has started at moderate levels but could become high at any time depending on geopolitical news.

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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