Pending Home Sales Fall Back to The 2nd Highest Level on Record

Pending home sales faltered a bit in September, like new home sales announced earlier this week, the decline ended a four-month winning streak. The National Association of Realtors® (NAR) said that its Pending Home Sales Index (PHSI) fell to 130.0, a 2.2 percent retreat from the August level. The index, based on signed contracts to purchase existing single-family homes, townhouses, condominiums, and cooperative apartment, fell in every region but the Northeast. However, it is still 20.5 percent higher than in September 2019 and retained double digit annual growth in all regional indices. Analysts had expected the positive run to continue. Those polled by Econoday were not universally upbeat, their forecasts were, in fact, wild. They ranged from a 4.0 percent downturn to a 9.5 percent increase. The Econoday consensus was for growth of 3.5 percent, while the consensus from Trading Economics was 3.4 percent.

Lower Rates Bringing In More Buyers (And Higher Prices)

The percentage of potential home buyers who perceive housing in their market as affordable increased in the third quarter, at least as reported in a recent National Association of Home Builders (NAHB) survey. NAHB's Housing Trends Report says that 27 percent of buyers responding to the survey reported they could afford at least half of the homes available for sale in their markets. This is up from 20 percent in the third quarter of last year. Rose Quint writes in NAHB's Eye on Housing blog that the increased responses indicate that lower mortgage rates have had a stronger impact on some buyers' perceptions of affordability than has rising home prices. "Nonetheless, it is important to keep in mind that most home buyers (72 percent) still say they can afford only a minority of the homes available in their markets," she says.

Mortgage Apps Rise Slightly, Purchase Loans End Four-Week Drought

Mortgage application volume rose slightly during the week ended October 23. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, increased 1.7 percent on a seasonally adjusted basis from one week earlier, its first increase in three weeks. On an unadjusted basis, the Index was 2.0 percent higher. The Refinance Index gained 3 percent from the previous week's level and was 80 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 66.7 percent of total applications from 66.1 percent the previous week. The Purchase Index was up 0.2 percent on a seasonally adjusted basis. Even if fractional, it was the first uptick in that index since the week ended September 18. The Index dipped 0.3 percent unadjusted but was 24 percent higher than the same week in 2019.