Existing home sales in February totaled 4.58mm, almost 400k more than expected and up from 4mm in February. A couple of things of note under the hood. While inventories remain tight with months’ supply at just 2.6 vs 2.9 in the two prior months and vs 3.3 in the two months before that, homes are sitting on the market longer and that totaled 34 days in February vs 33 in January, 26 in December, 24 in November and 21 in October. One yr ago it was 18 days. Home prices were flat y/o/y, a godsend for the first time buyer but many are still financially challenged and why they made up just 27% of purchases vs 31% in the two months before and vs 28% in the two months before that. Cash buyers made up 28% of purchases vs 29% last month and vs 28% in the month before.
The NAR said “Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.” I will say from personal experience that there are still multiple bids being placed on homes with many still going above ask in tight supply markets.
Bottom line, because of the volatility in mortgage rates I would assume that those who were buying a home and using a mortgage definitely took advantage of the 60 day rate lock which would imply that many of the contracts here were likely signed in December and January when mortgage rates were off their October/November highs and likely accounts for the upside surprise. The situation though remains fluid with us wondering if prices break lower though inventories still remain lean. Either way, the pace of transactions still should remain more muted with mortgage rates north of 6%.
And talk about an immediate disruption in the mortgage market as Bankrate.com last night said the average 30 yr mortgage rate is still at 6.90%, just 20 bps off the 2023 peak seen a few weeks ago even though the 10 yr yield has dropped by 43 bps in the same time frame. MBS spread widening.
Home Closings
Months’ Supply
Median Home Price y/o/y
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.