Mortgage Watch | August 26, 2019

Existing Home Sales Continue to Impress

What is normally considered the “selling season” has gotten a retroactive boost in recent days. The National Association of Realtors’ chief economist Lawrence Yun reports that the sales of previously owned U.S. homes picked up in July, suggesting that lower mortgage rates are beginning to drive sales after a weak spring selling season.

It’s always news when sales are better than expected. And existing-home sales rose 2.5% in July from the previous month to a seasonally adjusted annual rate of 5.42 million, according to the NAR. They were expected to rise just 2.3%.

Compared with a year earlier, sales in July rose 0.6%, the first increase after a streak of 16 consecutive months of year-over-year declines. Yun says July’s uptick was a combination of incredibly low mortgage rates and strong job conditions.

June’s sales were revised higher, to a 5.29 million annual rate from an earlier estimate of 5.27 million, capping off a less than optimum spring selling season. March through June is when roughly 40% of the year’s sales take place. So even a slight pickup is good news.

Steadily falling mortgage rates are definitely in the mix, while a shortage of homes for sale has raised its head as a larger issue, keeping home prices high. The median sale price for an existing home in July was $280,800, up 4.3% from a year earlier. There was a 4.2-supply of homes on the market at the end of July, based on the current sales pace.

According to Yun, low inventory remains a challenge for the market during the second half of the year. “The job market still remains strong but there is increasing economic uncertainty,” he said, adding “people may be hesitant to buy a home if they think we may be facing an economic recession.”

While purchases of previously owned homes account for the bulk of U.S. home buying, the Commerce Department last week reported that home building fell in July for the third straight month. Housing starts, a measure of new-home construction, fell 4% in July from the prior month to a seasonally adjusted annual rate of 1.191 million.

Source: Realtor, TBWS

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today. Last week the MBS market worsened by -15bps. This caused rates to mostly move sideways. Rate markets showed a good deal of volatility last week.

 

 

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.