November 22nd, 2021 1:18 PM by Richard Sardella MLO.100007700/NMLS 233568
Existing Home Sales and Prices Surge:
Existing-home sales increased in October, marking two straight months of growth, according to the National Association of Realtors®.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.8% from September to a seasonally adjusted annual rate of 6.34 million in October.
"Home sales remain resilient, despite low inventory and increasing affordability challenges," said Lawrence Yun, NAR's chief economist. "Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment."
Total housing inventory at the end of October amounted to 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September's supply, and down from 2.5 months in October 2020.
The median existing-home price for all housing types in October was $353,900, up 13.1% from October 2020 ($313,000), as prices climbed in each region. This marks 116 straight months of year-over-year increases, the longest-running streak on record.
"Among some of the workforce, there is an ongoing trend of flexibility to work anywhere, and this has contributed to an increase in sales in some parts of the country," said Yun. "Record-high stock markets and all-time high home prices have worked to significantly raise total consumer wealth and, when coupled with extended remote work flexibility, elevated housing demand in vacation regions."
Properties typically remained on the market for 18 days in October, up from 17 days in September and down from 21 days in October 2020. Eighty-two percent of homes sold in October 2021 were on the market for less than a month.
In October, first-time buyers were responsible for 29% of sales, up from 28% in September and down from 32% in October 2020. NAR's 2021 Profile of Home Buyers and Sellers – released earlier this month4 – reported that the annual share of first-time buyers was 34%.
Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in October, up from both 13% in September and from 14% in October 2020. All-cash sales accounted for 24% of transactions in October, up from both 23% in September and from 19% in October 2020.
Distressed sales – foreclosures and short sales – represented less than 1% of sales in October, equal to the percentage seen a month prior and equal to October 2020.
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: Higher
Mortgage rates are moving slightly higher today. The MBS market improved by +0 bps last week. This was not enough to change mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Higher
Three Things: These are the three areas that have the greatest ability to impact your rates this week: 1) Inflation, 2) The Fed and 3) Data deluge
1) Inflation: We get the Fed's key measure of inflation (Core PCE YOY) on Wednesday and it is expected to rise 3.6% to 4.1% which is more than DOUBLE their target rate and could heavily influence their "dot plot" chart that is due to come out at their December meeting.
2) The Fed: President Biden has decided to keep Powell as Fed Chair and elevate Governor Brainard to one of the Vice Chair positions. The bond market is now squarely focused on the pace of their taper after December.
3) Data Deluge: We have a monster Wednesday as we have all of the usual Thursday and Friday releases crammed into Wednesday due to out Thanksgiving Holiday. In addition to PCE mentioned above, we get Personal Incomes and Spending, Initial Weekly Jobless Claims, Durable Goods Orders, GDP, New Home Sales, Consumer Sentiment
Treasury Sales: Here is this week's Treasury auction schedule:
11/22 2 year Note, 5 year note
11/23 7 year note
This Week's Potential Volatility: High
This morning we saw some positive numbers before selling hit hard. Volatility is high as markets prepare for a packed week.
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 27 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.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.