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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

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    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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  • Housing market has hit ‘rock bottom,’ says Redfin CEO Glenn Kelman

    Housing market has hit ‘rock bottom,’ says Redfin CEO Glenn Kelman

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    Housing market has hit ‘rock bottom,’ says Redfin CEO

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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

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    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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  • Some good news: One key driver of inflation is finally showing signs of easing

    Some good news: One key driver of inflation is finally showing signs of easing

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    Rent growth is beginning to cool. But it’s descending from a heck of a peak.

    Rental prices climbed 7.2% between September 2021 to September of this year, the largest annual increase since 1982, according to consumer price data released Thursday. Overall, shelter costs were also among the most significant drivers in rising consumer prices, along with the cost of food and medical care, the Labor Department said.

    Still, it’s not all bad news for tenants. A new report from Realtor.com out Thursday found that nationwide, median rental prices in 50 large metros grew at their slowest annual pace in 16 months in September — at 7.8%. That marked the second consecutive month of single-digit year-over-year growth for 0-2 bedroom properties, and it meant that median asking rents fell by $12 in a month, Realtor.com said. 

    Housing inflation in the Consumer Price Index lags trends in the rental market, though, meaning the slowdown in rent growth might not register in the data for a while. 

    While median rental prices are still nearly 23% higher than they were two years ago, they’re no longer climbing at breakneck speeds with no end in sight. These days, economists say, that counts as a silver lining. 

    “After more than a year of double-digit yearly rent gains and nearly as many months of record-high rents, it’s especially important to see consistency before we confirm a major shift like the recent rental market cool-down,” Realtor.com Chief Economist Danielle Hale said in a statement. “But September data provides that evidence, as national rents continued to pull back from their latest all-time high registered just two months ago.”

    “This return of more seasonal norms indicates that rental markets are charting a path back toward a more typical balance between supply and demand, compared to the previous year,” Hale added. “We expect rent growth to keep slowing in the months ahead, partly driven by the impact of inflation on renters’ budgets.” 

    Affordability, however, is worsening, Realtor.com said. Blame the fact that consumer prices are rising faster than wages. 

    (Realtor.com is operated by News Corp
    NWSA,
    +1.64%
    subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)

    A Redfin
    RDFN,
    -3.55%
    report out Thursday, meanwhile, said rents grew 9% year-over-year in September — the slowest pace since August 2021. Rents were still way up year-over-year in cities like Oklahoma City (24.1%), Pittsburgh (20%), and Indianapolis (17.9%.) 

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