Overview: Over the past week, the upward momentum stalled for global bond yields, including U.S. mortgage rates. While there was no obvious news behind the change in sentiment, rates ended the week well below their recent peaks.
Not surprisingly, home buyers have been very sensitive to mortgage rates lately. In September, sales of existing homes, which make up roughly 90% of the market, fell for the eighth straight month to the lowest level since 2012 (excluding a brief period early in the pandemic) and were 24% lower than last year at this time. Inventory levels were slightly lower than a year ago, at just a 3.2-month supply nationally. Although the median existing-home price of $384,800 was 8% higher than a year ago, this was down from a record high of $413,800 in June. A similar story took place in sales of new homes, which account for the remaining 10% of the market. In September, new home sales dropped 11% from August to 603,000 and were 18% lower than a year ago. While this was well above the disappointing July reading of just 511,000, the lowest level since February 2016, it was still a far cry from the recent peak of roughly one million in January 2021. The median price of a new home was 14% higher than a year ago at $470,600. The impact of higher mortgage rates can also be seen in mortgage application volumes, which are now at the lowest levels in 25 years. According to the latest data from the Mortgage Bankers Association (MBA), purchase applications are down 42% from last year at this time, and applications to refinance a loan have plunged a shocking 86% from one year ago. As buyers seek lower rates, the share of adjustable-rate applications was 13%, remaining near the highest level since 2008.
Existing-Home Sales (millions)
October 27 — European Central Bank meeting
October 27 — Third quarter gross domestic product (GDP)
October 28 — Core Personal Consumption Expenditures (PCE) Price
November 2 — Federal Reserve meeting (75 basis-point rate increase expected)