Reversal in Home Sales Slump

Home sales appear poised to reverse their downward trend, as contract signings in each of the four major U.S. regions rose in June, according to the National Association of REALTORS®’ latest Pending Home Sales Index. The West saw the highest increase in contract signings last month, according to NAR’s report.

Contract signings are now up 1.6% year over year, ending a 17-month streak of annual decreases. NAR Chief Economist Lawrence Yun sees the increase as the likely start of a lasting trend for home sales in the coming months. “Job growth is doing well, the stock market is near an all-time high, and home values are consistently increasing,” Yun says. “When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases.”

Is Market Volatility Giving Buyers Cold Feet?

It seems a 1,000-plus point drop in the stock market last week mixed with rising interest rates may have been enough to give homeowners and buyers the jitters. Overall mortgage applications last week dipped 4.1 percent week over week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday.

Broken out, mortgage applications for home purchases plunged 6 percent last week. However, that number is still 4 percent higher than last year. Home buyers complain of weakened affordability and lengthier home searches in research released this week by the National Association of Home Builders. Refinance applications dipped 2 percent last week, but they remain 2.8 percent higher than the same week a year ago.

Mortgage rates continue to move upwards. Last week the 30-year fixed-rate mortgage rose to its highest rate since January 2014, averaging 4.57 percent, the MBA reported.

Source: “Stock Jitters and Higher Interest Rates Drive Weekly Mortgage Applications Down 4.1%,” CNBC (Feb. 14, 2018)