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Home Sales Slip


Overview: There was little major economic news affecting mortgage markets over the past week. Investors mostly remained on the sidelines, and mortgage rates ended nearly unchanged.

 

In December, sales of existing homes fell for the 11th straight month to the lowest level since 2010 and were 35% lower than last year at this time. Inventory levels dropped 13% from November, to just a 2.9-month supply, well below the roughly 5-month supply that is typical in a balanced market. While the median existing-home price of $366,900 was 2% higher than last December, this was down from a record high of $413,800 in June. In other words, the pace of annual home price gains has dropped sharply from the double-digit levels commonly seen during the last few years. Some of the latest data was encouraging about the amount of badly needed additional home inventory on the way, and some was less so. In December, single-family housing starts increased 11% from November to the best level since August. On the other hand, single-family building permits, a leading indicator of future activity, fell 7% from November to the lowest level since February 2016. Builders continue to point to higher prices for land, materials, and skilled labor as obstacles to a faster pace of construction. Due to the steep rise in mortgage rates in 2022, application volumes fell to the lowest levels in 25 years, yet they just posted very impressive results. According to recent data from the Mortgage Bankers Association (MBA), purchase applications jumped 25% last week, but are still down 39% from last year at this time. Applications to refinance a loan rose an even larger 34% from last week, but remain down a shocking 77% from one year ago.

 

Existing Home Sales (millions)

 

Week Ahead


January 26

Fourth-quarter gross domestic product (GDP)

New-Home Sales report


January 27

Core Personal Consumption Expenditures (PCE) Price Index


February 1

Federal Reserve meeting (25 basis-point rate hike expected)

Institute for Supply Management (ISM) Manufacturing Index


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