CHM Blog

Real estate sales continue to be a marathon, not a sprint

Realtor.com’s Andrea Riquier waited and waited to write a recent headline that announced that after 6 long years, the moment homebuyers have been waiting for has finally arrived. Yes. Home prices are going down at last.

But do homebuyers really feel it with mortgage rates in some kind of endless purgatory? “The issue of affordability persists,” Realtor.com's Danielle Hale says. “It will continue to create barriers to homeownership, leading to weakened demand in the housing market and dampened competition.”

When Americans suffered serious sticker shock as median listing prices hit an all-time record high of $449,00, most felt there had to be a tipping point coming sometime soon, and it has. In June that median price slid to $441,000 from the same time a year ago. “This $8,000 drop from the previous year’s price might not seem like much, but as the first annual decline seen in Realtor.com data history since 2017, it’s a pivotal moment, people!” she writes. “Let us pause for a moment and appreciate this.” She adds that if you pile the fact that home prices tend to peak each June and then descend toward the holidays, it’s even better news for the end of 2023, with price growth expected to decline at a modest rate of 0.6% for the year, according to predictions.

While prices softened, however, homeowners stayed put. In June, the number of homes newly listed for sale declined by 24.1% compared with the same time last year. Those who hoped to sell may be a tad upset that they can’t fetch the same nosebleed prices their neighbors did a year earlier, but even if they listed, it’s just too painful for them to leave the very low mortgage rate they already have on their current home.

What about homes for sale right now? While fresh listings are down, there’s still plenty of selection, with many ripe for price cuts. A full 14% of homes had price reductions, as the typical home spent 43 days on the market, two weeks longer than last year.

The busiest markets (the South and the West) had the biggest increases in listing times. In the South, homes took 15 days longer to sell than last June; in the West, it was 10 days. In the more affordable Midwest and the Northeast, the number of days on the market was only seven days greater.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market worsened by -29 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Jobs, 2) The Fed and 3) Manufacturing.

1) Jobs: We get a ton of job and wage related data this week culminating in Big Jobs Friday. Challenger Job Cuts, Initial Weekly Jobless Claims, ADP Payrolls, JOLTS, Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings and key employment measures in several ISM reports.

2) The Fed: On Wednesday we will get the Minutes from the last FOMC meeting. This is the meeting where they kept their key interest rate unchanged and had a unanimous vote even though we had a lot of chatter leading up to that meeting calling for a hike. So, the bond market is very interested in some more color as to what the Fed discussed.

3) Manufacturing: After last week's weaker than expected regional Chicago PMI, the markets will be focused on the small-med sized manufacturing report, Markit Flash PMIs and our headline large business manufacturing report, ISM Manufacturing. We also get Factory Orders and Services (Non Manufacturing) ISM.

This Week's Potential Volatility: High

This morning markets are mostly treading water. Volatility will be moderate to start and likely spike after the holiday.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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