It is rare indeed when we can report on new, existing, and pending home sales in one fell swoop but all three reports were issued while many of us were enjoying friends, family, turkey and pie. The data was mixed, and relatively flat, but then we are morphing into the holiday rather than the home buying season.
Existing home sales rose for the second month in a row in October, up 2.0% to a seasonally adjusted annual rate of 5.60 million units. It wasn’t much of a gain, but tacked on to September’s more robust increase, sales were at the highest annualized rate since February 2007 and 5.9% higher than the previous October.
Pending sales were also up, but hardly enough to notice. National Association of Realtor economist Lawrence Yun called the 0.1% gain “miniscule.” Still it was enough to give the Pending Home Sale Index a two-month winning streak and bring it back to where it last was in July.
October new home sales were estimated at a rate of 563,000, off by 1.9% from what had originally been reported as a great September. Those sales also lost some luster under revision, downgraded from 593,000 to 574,000 units.
We also had a “hat trick” with home prices. Three of the four major indices came in during our hiatus. One was especially crucial.
The Federal Housing Finance Agency (FHFA) said its House Price Index (based on mortgages sold or guaranteed by Freddie Mac and Fannie May) rose 1.7% during the third quarter. This, under rules established by Congress, was enough to trigger the first revision of conforming loan limits in a decade. On January 1, the new maximum will be $424,100 rather than the $417,000 limit that has been in place since 2006.
All three home price reports continue to contradict most forecasts expecting some moderation. FHFA said prices were 6.1% higher year-over-year while Case-Shiller’s National Index rose 5.5% (0.4 points more than in August) and Black Knight’s Home Price Index was up 5.4% against 5.3% the previous month.
Finally, we hope you were lulled sufficiently by an overload of tryptophan to miss the interest rate antics of the last two weeks. Freddie Mac reported a 9-basis point (bp) increase last Wednesday, tipping the 30-year fixed rate mortgage just over 4%. Then bond market volatility drove some lender quotes as much as 20 bps higher by week’s end. While Freddie’s rate rose to 4.08% this week, things seem to have quieted down.
Freddie’s economists say they expect these rates will hold and that further increases will be modest. They are forecasting an average of 4.2% through 2017.