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New US Home Sales Fall Again As ‘Skittish’ Buyers Balk
A day on from another lackluster read on existing home sales in the US, government data suggested new home sales were similarly moribund in June.
At 617,000, the annual rate came in well short of the 640,000 consensus expected, marking a second consecutive monthly decline.
Recall that sales plummeted in May. Consensus expected a decent rebound but... well, no dice.
New construction still has a number of things going for it, not least of which is the dearth of resale inventory. Tuesday's NAR
Mortgage rates are too high. First, the basis between US Treasury bonds and mortgage rates blew out. That accounts for about 100-150 bps on mortgage rates. Now you are in the range of 5.5%. FOMC target rates probably add another 100-150 bps, in other words real rates are too high in the short to intermediate US Treasury curve. The housing market would look much different if mortgage rates were at between 4%-4.75% which is my estimate of where 30 yr fixed rates should be. Other rates to small businesses and consumers are also far too high. If you are a large corporation, US Treasury, or large entity you are not suffering nearly as much.
So if you are a small player rates are way too high. If you are large they are high but not that onerous.
The housing shortage could be lessened if municipalities cut impact fees, expand tax credits for low income housing and change zoning regulations.
H: why would refi index still be high if we’re still close to a 7 handle on mortgage rates?
Because some people financed at even higher rates.