Overview: With little major economic news and a highly anticipated Federal Reserve event coming up on Friday, it was a quiet week for mortgage markets, and rates ended nearly unchanged.
In July, sales of existing homes, which make up roughly 90% of the market, rose 2% from June and were slightly higher than a year ago. Inventory levels were down 12% from last year, at just a 2.6-month supply nationally, which is well below the 6-month supply that is considered a healthy balance between buyers and sellers. The median existing-home price of $359,900 was 18% higher than last year at this time. Several trends have emerged due to the tight conditions in the housing market in many regions. All-cash purchases made up 23% of existing-home sales, up from 16% a year ago. Sales of homes priced below $250,000 were 30% lower than a year ago. While low mortgage rates have been favorable, rising prices and competition from investors have made it more difficult for buyers to find affordable homes, especially at the lower end of the market. By contrast, sales of homes priced between $750,000 and $1,000,000 surged more than 55% since last July.
After three straight months of declines, new-home sales, which account for the remaining 10% of the market, increased 1% in July. This was close to expectations. Sales of existing homes are based on actual closings, while new-home sales reflect contracts signed during the month, which make them a more current indicator of housing market activity.
Looking ahead, investors will monitor comments from Federal Reserve officials for hints about the timing of future monetary policy changes. Beyond that, a highly anticipated speech by Fed Chair Jerome Powell will take place on Friday at the Jackson Hole conference, and investors expect additional guidance about the bond purchase program. The core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, also will be released on Friday. The Institute for Supply Management (ISM) Manufacturing Index will come out on September 1, and the next Employment Report will be released on September 3.
Existing-Home Sales (millions)