Rates Essentially Unchanged; Both New Home Sales and Existing Home Sales Softer than Expected
Mortgage rates increased 1 basis point from last week according to the Freddie Mac Primary Mortgage Market Survey released July 24th. Although they essentially remained flat from last week, they have decreased nearly half a percent from their peak earlier this year. Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data.
Mortgage applications decreased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending July 19, 2024. “Mortgage rates continued to ease, with the 30-year fixed rate dipping to the lowest level since February 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were up, driven by conventional and FHA application activity, as some borrowers took the opportunity to act. Furthermore, the conventional refi index was at its highest level since September 2022.” Added Kan, “Purchase applications decreased as ongoing affordability challenges persist with rates at their current levels and with home-price appreciation still strong in many markets.”
Sales of new US homes unexpectedly declined to a seven-month low in June as the mix of stubbornly high mortgage rates and prices deterred prospective buyers. Contract signings on new single-family homes decreased 0.6% to a 617,000 annual pace, following a nearly 15% drop in May that was the largest in two years, according to government data released Wednesday. The latest figures follow a topsy-turvy first half of the year, with sales gaining ground throughout the spring before slumping in May by the most in nearly a year. Thirty-year mortgage rates have dipped below 7% in recent weeks, but remain double what they were at the end of 2021, encouraging many builders to offer sales incentives such as buying down customers’ mortgages.
Existing-home sales faded 5.4% in June to a seasonally adjusted annual rate of 3.89 million. Sales also slumped 5.4% from one year ago. The median existing-home sales price bounced 4.1% from June 2023 to $426,900, the second straight month it reached an all-time high and the twelfth consecutive month of year-over-year price gains. The inventory of unsold existing homes rose 3.1% from the previous month to 1.32 million at the end of June, or the equivalent of 4.1 months’ supply at the current monthly sales pace. “We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR Chief Economist Lawrence Yun. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
