Taking advantage of the dip in mortgage rates, though now having reversed, pending home sales in January jumped 8.1% m/o/m, well more than the estimate of up 1%. All regions saw increases in contract signings in the month. The NAR said simply, “Buyers responded to better affordability from falling mortgage rates in December and January.”
I’ll say again that the key question for housing this year is how much do prices fall in order to mitigate the sharp rise in mortgage rates at the same time the inventory of existing homes remains historically low. The NAR is predicting a modest 1.6% drop in price this year but I’ve seen some estimates of as much as down 20%. How this standoff in price plays out will also of course dictate the pace of transactions and all the economic activity that surrounds a purchase and sale.
Mortgage rates averaged 6.26% in January vs 6.60% in Q4 and vs 6.62% as of last week.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.