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  • U.S. pending home sales stay near record low despite modest pickup in September

    U.S. pending home sales stay near record low despite modest pickup in September

    The numbers: U.S. pending home sales rebounded in September but remain near a record low as high mortgage rates and low inventory continue to hurt the real-estate sector.

    Pending home sales rose 1.1% in September from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    But pending home sales were still depressed on an annual basis due to the dearth of home listings. The September figure was the second-lowest reading since the NAR began tracking the data in 2001.

    Transactions were down 11% from last year.

    Nonetheless, the sales pace exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 1.5% in September.

    Pending home sales reflect transactions where the contract has been signed for the sale of an existing home, but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    The NAR also released an updated forecast for existing-home sales on Thursday. The group expects sales to fall 17.5% in 2023 to a pace of 4.15 million, which will be the slowest pace since 2008. Yet due to low inventory, the median home price will increase by 0.1% in 2023, the NAR said, to $386,700.

    The group expects home sales to rebound in 2024, rising 13.5% to a rate of 4.71 million. Home prices are expected to rise 0.7% next year, to $389,500. 

    The NAR also expects the 30-year mortgage rate to fall to 6.9% in 2023 and 6.3% in 2024. The 30-year was averaging 7.98% as of Wednesday, according to Mortgage News Daily.

    Big picture: The U.S. housing market is dealing with problems on both the demand and supply sides, but the NAR seems confident that the sector will recover in the new year.

    At present, not only are rates high enough to discourage home buyers, the lack of inventory is also making homes more expensive, which further spooks buyers. The NAR expects the pace of existing-home sales to fall to the slowest in 15 years, when the U.S. was in the midst of a recession caused by the subprime-lending crisis.

    What the realtors said: “Because of home builders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” NAR Chief Economist Lawrence Yun said. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”

    Market reaction: Stocks
    DJIA

    SPX
    were mixed in early trading on Thursday. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • U.S. home sales fell in September to the lowest level since the Great Recession

    U.S. home sales fell in September to the lowest level since the Great Recession

    The numbers: Home sales in September fell to the lowest level since 2010, as high mortgage rates continue to hammer the housing market.

    Aside from low inventory, rising rates are eroding buyers’ purchasing power, and drying up demand. Sales of previously owned homes fell by 2% to an annual rate of 3.96 million in September, the National Association of Realtors said Thursday.

    That’s the number of homes that would be sold over an entire year if sales took place at the same rate every month as they did in September. The numbers are seasonally adjusted.

    The drop in sales was slightly better than what Wall Street was expecting. They forecasted existing-home sales to total 3.9 million in September.

    Compared to September 2022, home sales are down by 15.4%. 

    Key details: The median price for an existing home in September rose for the third month in a row to $394,300. Prices are up 2.8% from a year ago. That was the highest price for the month of September since NAR began tracking the data.

    Home prices peaked in June 2022, when the median price of a resale home hit $413,800.

    Around 26% of properties are being sold above list price, the NAR noted.

    The total number of homes for sale in September fell by 8.1% from last year, to 1.13 million units. Housing inventory for the month of September was the lowest since 1999, when the NAR began tracking the data.

    Homes listed for sale remained on the market for 21 days on average, up from the previous month. Last September, homes were only on the market for 19 days.

    Sales of existing homes rose only in the Northeast in September, as compared with the previous month, by 4.2%. The median price of a home in the region was $439,900. 

    All-cash buyers made up 29% of sales, highest since January 2023. The share of individual investors or second-home buyers was 18%. About 27% of homes were sold to first-time home buyers.

    Big picture: The U.S. housing market is in the midst of a serious slowdown that is primarily driven by high mortgage rates. High rates spook home buyers, drying up demand, and high rates also deter homeowners from selling since they may have to purchase another home. For a homeowner with a 3% mortgage rate for the next few decades, there’s little incentive to move.  

    And the residential sector is likely to see sales fall further in October’s data, as the 30-year mortgage inches even higher. Demand for mortgages has collapsed, and some outlets like Mortgage News Daily are quoting a rate of 8% for the 30-year.

    Existing-home sales in 2023 could fall to the slowest pace since the housing bubble burst in 2008, real-estate brokerage Redfin said on Thursday, at a 4.1 million pace. 

    What the realtors said: “Mortgage rates and limited inventory has been the story throughout this year — no different this month, other than the fact that interest rates are moving higher,” said Lawrence Yun, chief economist at the National Association of Realtors. 

    “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains,” he added. “We don’t want the Fed to overdo it and cause great harm to real estate.” 

    Yun also questioned whether there will be a “fundamental change” or a temporary one to the “American way of life” due to the slowdown in sales.

    Market reaction: Stocks were down in early trading on Thursday. The yield on the 10-year note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • U.S. housing starts drop to lowest level since June 2020

    U.S. housing starts drop to lowest level since June 2020

    The numbers: Construction of new U.S. homes fell 11.3% in August — falling short of Wall Street expectations — as builders scaled back new projects to focus on completions.

    The pace of construction reversed course and fell as mortgage rates stayed over 7%, dampening home-buying demand. The last time construction of new homes was at this level was in June 2020.

    So-called housing starts fell to a 1.28 million annual pace from 1.45 million in August, the government said Tuesday. That’s how many houses would be built over an entire year if construction took place at the same rate every month as it did in August.

    Economists on Wall Street were expecting a drop in starts to 1.43 million. All numbers are seasonally adjusted. 

    Housing starts peaked at 1.8 million in April 2022. 

    The number of homes started in July was revised downwards, to an increase of 2% to 1.45 million, from an initial reading of a 3.9% gain. 

    More from MarketWatch: Meet the brave Americans buying and selling their homes, despite stubbornly high interest rates

    New homes have dominated the housing market, but persistently high rates are beginning to spook home builders. In anticipation of waning demand, builders said they’ve started to ramp up price cuts to boost buyer demand in September, according to a survey by the National Association of Home Builders. 

    Building permits, a sign of future construction, rose 6.9% to a 1.54 million rate. That’s the highest level since October 2022.

    Key details: The construction pace of single-family homes fell by 4.3% in August, and apartment-building construction fell by 26.3%.

    But home builders ramped up single-family home construction in the South, where starts rose by 8.1% in August.

    Housing starts fell the most in the West, by 28.9%.

    Permits for single-family homes rose 2% in August, while permits for buildings with at least five units or more surged by 14.8%.

    Around 1.69 million homes were under construction as of August. 

    Big picture: Builders are increasingly concerned about how 7% rates will impact demand, and they’re pulling back on starting new developments as a result. 

    Builder confidence in September fell to the lowest level in five months, according to the NAHB. Home builders are increasingly offering incentives, including cutting prices. The share of builders cutting prices to boost sales rose to the highest level in nine months, the NAHB noted, going up to 32% in September from 25% the previous month.

    Nonetheless, given the long-term need for housing and a decade of underbuilding, builders may not see a sustained drop in demand. 

    What are they saying? Despite starts falling sharply in August, the uptick in building permits “suggests housing starts could pick up modestly again and today’s data could reflect some volatility,” CIBC Economics said in a note. “Nonetheless, the cooling in building activity is a good sign for the Fed which is expecting to limit housing market activity in an effort to contain inflation.”

    Rates have peaked, but “will remain elevated for the rest of the year,” Capital Economics wrote in a note. And this means that with “a slowing economy, we expect this will lead single-family starts to flatten-off at around 900,000 annualised until mid-2024, after which an economic recovery will help spur buyer demand and supporting renewed homebuilder confidence,” they added.

    Market reaction: U.S. stocks
    DJIA

    SPX
    were set to open higher early Tuesday. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose above 4.3%.

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  • ‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

    ‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

    The numbers: Home sales inched up for the first time in four months, even as the U.S. housing market continues to deal with a dearth of listings. 

    Pending home sales rose by 0.3% in June from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    The figure exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 0.5% in June.

    Transactions were still down 15.6% from last year.

    Pending home sales reflect transactions where a contract has been signed for the sale of an existing home but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    Big picture: Home sales rose as the housing market contends with excess buyer demand and a shortfall in the supply of homes for sale. 

    Real-estate agents are looking to home builders to fill the gap as rate-locked homeowners hold out on selling. New-home sales surged in May, and while they lost some momentum in June, the broader trend is still upward.

    The prices of new homes, which are generally seen as more expensive, are also coming down. The gulf between the median price of a new home and of an existing home narrowed in June, based on data from the NAR and the federal government. 

    What the real-estate experts said: “The recovery has not taken place, but the housing recession is over,” NAR chief economist Lawrence Yun said. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply.” 

    The NAR also said it expects rates for 30-year mortgages to average 6.4% this year and to fall to 6% in 2024. 

    The NAR also expects existing-home sales to fall 12.9% in 2023 from the previous year, to 4.38 million, before recovering in 2024 to a rate of 5.06 million.

    The group also expects home prices to hold steady this year, falling only slightly by 0.4% to $384,900, before rising 2.6% next year to $395,000.

    “The West — the country’s most expensive region — will see reduced prices, while the more affordable Midwest region is likely to see a small positive increase,” Yun added.

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  • U.S. housing starts surge as builders rev up single-family home construction in May, while a housing shortage drags on 

    U.S. housing starts surge as builders rev up single-family home construction in May, while a housing shortage drags on 

    The numbers: Construction on new American homes jumped 21.7% in May, as homebuilders ramp up building single-family homes to meet strong demand from buyers.

    Housing starts rose to a 1.63 million annual pace last month from 1.34 million in April, the government said Tuesday. That’s how many houses would be built over an entire year if construction took place at the same rate in every month as it did in May.

    Economists were expecting a slight decline of about 0.8%. The numbers are seasonally adjusted.

    This is the second month in a row that starts are up. The pace of construction was the highest since last April, when starts hit a 1.8 million pace.

    The surge in construction this spring was led by the Midwest.

    Both single and multi-family construction rose in May. Keen interest from would-be home buyers is creating strong demand for new homes. These buyers continue to face a lack of options in the resale market. 

    Building permits, a sign of future construction, rose 5.2% to a 1.49 million rate.

    Key details: As the weather warms up, construction pace has picked up considerably.

    The construction pace of single-family homes rose 18.5% in May while apartment building rose 28.1%.

    Home builders were most active in the Midwest, where housing starts rose by 67% from the previous month. The Midwest also led the nation in terms of single-family construction.

    Permits for single-family homes rose 5.2% in May while permits in buildings with at five units or more rose 7.8%.

    Housing starts are up on an annual basis for the first time in nearly a year. The annual rate of total housing starts rose 5.7% from last May.

    Big picture: New construction is a bright spot in an otherwise despondent housing market. For the buyers who brave 6% mortgage rates, there are few options in the resale market, which continues to funnel demand for new homes. 

    In fact, demand is so strong that homebuilders are pulling back on sales incentives, such as price cuts, the National Association of Home Builders reported on Monday. 

    Builders also reported that they were feeling upbeat about the housing market for the first time in nearly a year.

    What are they saying? “To say that we did not see this one coming would not even come close to capturing the degree to which the May residential construction data caught us off guard,” Richard Moody, senior vice president and chief economist at Regions Financial Corporation, wrote in a note.

    “This is without question an exaggeration of the underlying reality and a reminder that the housing starts data are among the most volatile and random of the government’s major economic indicators,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.

    “Having said that,” he added, “the housing sector broadly appears to be healing remarkably fast after enduring a historic shock in affordability last year, when 30-year mortgage rates more than doubled.”

    Market reaction: U.S. stocks
    DJIA,
    -0.59%

    SPX,
    -0.39%
    were down in early trading on Tuesday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.721%
    rose above 3.7%.

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  • U.S. pending home sales rise 2.5% in December. Realtors say the housing market is in recovery mode.

    U.S. pending home sales rise 2.5% in December. Realtors say the housing market is in recovery mode.

    The numbers: U.S. pending-home sales rose 2.5% in December, reversing a six-month losing streak, according to the monthly index released Friday by the National Association of Realtors (NAR).

    Pending home sales were down for six months in a row, as the U.S. Federal Reserve increased interest rates and mortgage rates took off.

    Pending-home sales beat analyst expectations. Analysts polled by the Wall Street Journal had forecast the pending home sales index to drop by 1%.

    Contract signings rose in the South and the West.

    Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. 

    Economists view it as an indicator for the direction of existing-home sales in subsequent months.

    Mortgage application activity hints at the housing market’s further recovery. Mortgage demand rose in the latest week. 

    Key details: Compared with a year earlier, transactions were down by 33.8%.

    On a monthly basis, pending sales rose in the South and the West. Sales dropped in the Northeast and Midwest. 

    Pending home sales fell the most since last December in the West, by 37.5%.

    Big picture: A dip in rates has boosted demand for mortgages. Buyers are coming back to the market, and the housing market is slowly recovering. But inventory remains low, as sellers hold out. Many are looking to the spring to see if sellers are motivated to list their homes.

    What the realtors said: “This recent low point in home sales activity is likely over,” NAR Chief Economist Lawrence Yun said. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

    Yun expects mortgage rates to hover between the 5.5% and 6.5% range. 

    He also expects the South to outperform in terms of sales, since the job market is stronger in the region.

    What they’re saying: “Home sales have now largely adjusted to the collapse in demand since late 2021. … [but] a sustained recovery likely remains a long way off,” Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics, wrote in a note.

    “The downturn in sales is coming to an end, but the decline in home prices is only just getting underway,” he added. He expects home prices to fall 15% over the next year.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.08%
    and the S&P 500
    SPX,
    +0.25%
    were mixed in early trading on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.511%
    rose above 3.5%.

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  • U.S. pending home sales fall 4% in November to the lowest level since April 2020

    U.S. pending home sales fall 4% in November to the lowest level since April 2020

    The numbers: U.S. pending-home sales fell 4% in November, which is the sixth straight monthly drop, according to the index released Wednesday by the National Association of Realtors (NAR).

    The index was last at this level in the midst of the pandemic lockdown, in April 2020.

    Analysts polled by the Wall Street Journal had forecast the pending home sales index to drop by 1.8%.

    Contract signings fell in all regions across the country.

    Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. 

    Economists view it as an indicator for the direction of existing-home sales in subsequent months.

    Key details: Compared with a year earlier, transactions were down by 37.8%.

    On a monthly basis, pending sales fell in all four major U.S. regions, led by the Northeast, where the index fell by 7.9%, followed by the Midwest, the South and the West.

    But pending home sales fell the most since last November in the West, by 45.7%.

    Pending home sales have fallen in all but one month in 2022. 

    Big picture: The housing market continues to stumble through 2022, as elevated mortgage rates keep buyers out of the market.

    Buyers are finding it hard to find an existing home for sale, as sellers hold on to their homes tied to ultra-low mortgage rates.

    November’s data is also tied to the period of time when mortgage rates were above 7%.

    What the realtors said: “With mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth,” NAR Chief Economist Lawrence Yun said. 

    What they’re saying: “Housing markets have entered a winter freeze,” George Ratiu, senior economist at Realtor.com, said in a statement. 

    “With prices for existing homes still elevated … and mortgage rates above 6%, homebuyers are finding much of today’s real estate landscape inaccessible,” he added.

    Ratiu estimated that monthly mortgage payment for a median-priced home has gone up by $780 since last year.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -1.10%
    and the S&P 500
    SPX,
    -1.20%
    were mixed in early trading on Wednesday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.872%
    rose above 3.8%.

    (Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, also a subsidiary of News Corp.)

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  • U.S. new home sales rose in November by 5.8%

    U.S. new home sales rose in November by 5.8%

    The numbers: U.S. new home sales rose 5.8% to a seasonally-adjusted rate of 640,000 in November, from a revised 605,000 in the prior month, the Commerce Department reported Friday.

    The November sales figure beat analyst estimates. Analysts polled by the Wall Street Journal had forecast new home sales to come in at 600,000 in November.

    The sales of new homes are below a peak of 1.04 million in August 2020.

    Year-over-year, new home sales are still down by 15.3%.

    New home sales rose a revised 8.2% to 605,000 in October, compared with the initial estimate of a 7.5% increase to 632,000. 

    The new home sales data are volatile month-on-month and are often revised. 

    Key details: The median sales price of a new home sold in November was $471,200, down from $484,700 in October.

    The supply of new homes for sale fell by 7.5% between October and November, equating to an 8.6-month supply. 

    Regionally, the West led the U.S. in the number of new homes sold, with new homes sold surging by 27.6%, followed by the Midwest. 

    Sales of new homes dropped in the Northeast and the South this November.

    Big picture: 7% mortgage rates didn’t put a damper on new home sales, as seen in today’s report.

    New home sales jumped in November, likely as buyers wanted to take advantage of incentives that builders are offering, from mortgage rate buydowns to price cuts.

    Builders have been gloomy almost all year, fretting about lower traffic.

    But with rates coming back down since, expect housing data to improve further.

    What are they saying? “I suspect that builders are much more motivated sellers (especially given the surge in financing costs) than current homeowners, who do not want to part with their 3% or lower mortgages,” Stephen Stanley, chief economist at Amherst Pierpont, wrote in a note. “This may explain why new home sales are rising while existing home sales plunge. ”

    But overall, sales are still weaker than usual: Stanley noted that combined existing and new home sales in November fell to the lowest level since 2011.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.53%
    and the S&P 500
    SPX,
    +0.59%
    were down in early trading on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.749%
    rose above 3.7%.

    Shares of builders, including D.R. Horton, Inc.
    DHI,
    -1.29%    ,
    Lennar Corp
    LEN,
    -0.46%    ,
    PulteGroup Inc.
    PHM,
    -0.52%    ,
    and Toll Brothers Inc.
    TOL,
    -0.33%
    traded lower during morning trading.

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