“How about those rates, huh?!”
Wrote scores of desperate buyer’s agents in emoji-riddled emails blasted out to BCC lists of anyone and everyone who’s ever contacted them expressing an interest in purchasing property.
Mortgage rates in the US are the lowest in a year. Ostensibly, that puts the American dream back within reach for at least some homeowner hopefuls for whom $30,000 or so in additional implied buying power takes them off the sidelines and puts them back in the game.
In reality, things are more complicated than that, but it does appear that the rate relief spurred otherwise moribund contract activity along in August. That’s according to the first of this week’s US macro data.
The NAR’s gauge of pending home sales rose 4% for August to 74.7, Monday’s release showed. That was ahead of every estimate, and it pushed the gauge to its best levels since March.
Needless to say, we’re a lot closer to record lows on this gauge than we are to the highs. And I’ve lost count of all the false dawns by now.
But, as noted here last week, anything that’s not overtly bad news counts as “good” news in US housing these days, and Monday’s data certainly wasn’t bad.
“Lower mortgage rates are enabling more home buyers to go under contract,” NAR Chief Economist Lawrence Yun said, in the perfunctory color accompanying the release. “In the Midwest, low mortgage rates combined with high levels of affordability are attracting more buyers compared to other regions,” he added.
(All that downtown Rust Belt shopping I did from 2021-2023 is starting to look prescient. Too bad I never the pulled the trigger on any of those properties.)
The comparatively lively read on contract signings bodes well for existing home sales in September. The resale market remained mired in the doldrums last month, but if today’s pending home sales print’s any indication, we might get a fillip for closings with the caveat that deals are falling through at very high rates.
Meanwhile, Redfin’s more timely data suggests the recovery in contract signings is already history. “Steadily falling mortgage rates haven’t brought many homebuyers to the market,” Dana Anderson said, noting that on Redfin’s tally, pending home sales fell 1% from a year earlier in the four-week rolling period ending September 21.
In the same article, Anderson reiterated a point I illustrated last week: When it comes to the uptick in mortgage applications, it’s almost all refis. Purchase activity remains very weak.
