Overview: Despite a lack of major economic news, mortgage markets were volatile over the past week. The daily movements were roughly offsetting, however, and rates ended with little change, near the highest levels in decades.
The major economic data this week came mostly from the housing sector, where higher mortgage rates and a low supply of homes on the market continue to restrain activity. Sales of existing homes, which typically make up about 90% of the market, fell slightly in July and were 17% lower than last year at this time. Inventory levels remain a big trouble spot, standing at just a 3.3-month supply nationally, far below the roughly 6-month supply that is generally seen in a balanced market and 15% lower than a year ago. The median existing-home price of $406,700 is 2% higher than last July.
Benefitting from the scarcity of previously owned homes on the market, sales of new homes, which account for the remaining 10% of the market under normal conditions, again surpassed expectations this month. New-home sales in July rose 4% from June to the highest level since February 2022, 32% higher than a year ago. The median price of a new house in July was $436,700, 9% lower than last year at this time. Notably, roughly 30-35% of homes listed for sale are new homes, far out of proportion to their usual much smaller share.
It should come as no surprise that high mortgage rates continue to have a huge impact on mortgage application volumes. According to the latest data from the Mortgage Bankers Association (MBA), purchase applications are down 30% from last year at this time, the lowest level in 28 years. Applications to refinance are down 35% from one year ago. In an attempt to reduce monthly payments, buyers are increasingly turning to adjustable-rate mortgages which offer lower rates.
Existing Home Sales (millions)
August 22 — Jackson Hole Economic Summit (Federal Reserve Chair Jerome Powell speaking)
August 29 — Job Openings and Labor Turnover Survey (JOLTS) report
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
September 1 — Employment Report