The National Association of Realtors' Pending Home Sales Index (PHSI)—which tracks contract signings on existing homes—has spent more than two years stuck in a rut, held back by affordability constraints and the lingering impact of elevated mortgage rates. April's update didn’t do the market any favors, but it also didn’t tell us anything particularly new. Pending sales dropped by 6.3% in April, marking the sharpest monthly decline since mid-2022 . The index fell to 71.3 , its third-lowest level on record , and is now 2.5% lower than a year ago . That sounds like a big move—and it is, on paper—but zooming out, the broader trend remains one of stagnation. We’re still very much bouncing around at the bottom of a severely depressed range that’s held steady for the better part of a year. “With mortgage rates still hovering around 7%, home sales are stagnant as more homebuyers remain on the sidelines,” said NAR Chief Economist Lawrence Yun. “There are job additions and income gains, but consumers are hesitant to move without meaningful rate relief. Increasing inventory and lowering mortgage rates will get more buyers and sellers back into the market.”
The Mortgage Bankers Association's (MBA) weekly application survey continues to track closely with the more granular daily rate data from MND. Both showed mortgage rates climbing to new multi-month highs last week, and that upward momentum once again took a toll on refinance demand—even as purchase applications managed to grind higher. “Mortgage rates reached [their] highest level since January, following higher Treasury yields,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Additional market volatility has added to the increase, keeping the mortgage-Treasury spread wider than it was earlier this year. The 30-year fixed rate increased to 6.98 percent, its third consecutive weekly increase.” Kan noted that while refis dropped, purchases continue to outperform year-ago levels thanks in part to rising inventory. That aligns with the broader data: refinance applications fell 7 percent from the previous week, while purchase applications rose 3 percent. Compared to the same week one year ago, purchases are up 18 percent and refis are still running 37 percent ahead—though that year-over-year gap is narrowing. Mortgage Rate Summary From MBA's data: 30yr Fixed: 6.98% (+0.06) | Points: 0.67 (−0.02) Jumbo 30yr: 6.93% (−0.01) | Points: 0.69 (−0.03) FHA: 6.66% (+0.06) | Points: 0.95 (−0.01) 15yr Fixed: 6.23% (+0.02) | Points: 0.67 (−0.05) 5/1 ARM: 6.22% (+0.06) | Points: 0.46 (+0.10)
Both FHFA and Case Shiller released home price data this week with some mixed messages for the housing market. The first thing to remember about the major home price indices is that they run about 2 months behind--for the month of March in the present case. Another important consideration when looking at month-to-month movement is that the FHFA price index is seasonally adjusted whereas Case Shiller is not. The unadjusted Case Shiller data is easy to spot on the chart below due to its regular peaks and valleys at the same time of year, almost every year. The monthly data doesn't look too troubling. Both metrics are mostly operating in positive territory and the FHFA index isn't any lower than it was last June. Actually, the index itself is higher (since the chart measures month-over-month change). Rather, at -0.1% versus the previous month, FHFA's index didn't fall any faster than it did last June. Year over year data makes it easier to see longer-term trends. It also means we don't have to worry about separating out seasonal adjustments. The chart above shows that the pace of home price appreciation has been declining for about a year, but that it remains in positive territory. In other words, prices are still rising year over year, just not as quickly. But that's not the full story. In addition to the unadjusted index, Case Shiller also has seasonally adjusted numbers and those show some more timely cause for concern. Nationally, prices declined by 0.3%--the first negative reading since early 2023 and one of the biggest month over month shifts since 2022. The shift was fairly broad based across the 20 metro regions with only 6 recording price increases.
The Census Bureau reported New Home Sales for April today, and at face value, the news is good. Economists expected an annual pace of 692k, but were instead treated to a surprisingly high 743k--just edging out 3 of the best months over the past 3 years. Unlike many of the other reports we cover, there's really no glaring counterpoint when we zoom out to a wider frame of reference. Sure, sales were higher during the post-pandemic housing frenzy, but unlike existing homes and other housing data, New Home Sales are as good or better than their pre-pandemic levels. So what's the catch? It's too soon to say. In some sense, today's results are cheapened by the fact that last month's numbers were revised quite a bit lower. Granted, big revisions are not-at-all uncommon for this data series, but if we're going to award titles like "best levels in 3 years," it's worth noting that this will not be the case if we see even a fraction of the same sort of downward revision next month. Geographically, the surprising surge was led by the South and Midwest. The Western region held mostly steady and the Northeast lost ground. Northeast 23k (down 4k from March) Midwest 84k (up 22k from March) South 478k (up 50k from March) West 158k (up 5k from March)
Two months ago, existing home sales came in at the highest levels in a year according the the National Association of Realtors (NAR). Last month's report showed a fairly sharp decline to 5 month lows. The latest data, out this week is less sensational by comparison. Granted, we can now technically say that existing sales are at 6 month lows, but they really didn't change much from a month ago. As has been and continues to be the case, zooming out on the same chart results in an entirely different impression of the home resale market. Then again, there is perhaps some solace in zooming out even more. “Home sales have been at 75% of normal or pre-pandemic activity for the past three years, even with seven million jobs added to the economy,” said NAR Chief Economist Lawrence Yun. “Pent-up housing demand continues to grow, though not realized. Any meaningful decline in mortgage rates will help release this demand.” Here's a regional breakdown of sales activity and prices from this report: Northeast Sales : 480,000 annual rate (↓2.0% from March) Median Price : $487,400 (↑6.3% YoY) Midwest Sales : 970,000 annual rate (↑2.1% from March) Median Price : $313,300 (↑3.6% YoY) South Sales : 1.81 million annual rate (unchanged from March) Median Price : $365,300 (↓0.1% YoY) West Sales : 740,000 annual rate (↓3.9% from March) Median Price : $628,500 (↓0.2% YoY)
The Mortgage Bankers Association's (MBA) weekly application survey has been doing a good job of tracking with the more granular daily rate data from MND. Both are in agreement that rates were on their way up to the highest levels in several months last week--a fact that seems to have taken a toll on both purchase and refinance applications. “Mortgage rates jumped to their highest level since February last week, with investors concerned about rising inflation and the impact of increasing deficits and debt,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Higher rates, including the 30-year fixed rate increasing to 6.92 percent, led to a slowdown across the board. However, purchase applications are up 13 percent from one year ago.” Here's the full breakdown on MBA's surveyed rates from last week: 30yr Fixed: 6.92% (+0.06) | Points: 0.69 (+0.01) Jumbo 30yr: 6.94% (+0.09) | Points: 0.72 (+0.23) FHA: 6.60% (+0.01) | Points: 0.96 (+0.07) 15yr Fixed: 6.21% (+0.09) | Points: 0.72 (+0.13) 5/1 ARM: 6.16% (+0.07) | Points: 0.36 (−0.38)
The Census Bureau is out with monthly construction numbers for April showing an uptick in construction activity offset by slightly lower permitting. While there are several other metrics in this report, building permits and housing starts (which measures when construction actually begins) are the two that are most widely followed. As seen in the chart below, housing starts tend to be more volatile, month to month. In the present case, however, they were only slightly higher than the previous month at an annual pace of 1.361 million vs 1.339 million. Starts would have fallen had it not been for the multifamily sector. Single unit starts dropped from 947k to 927k while multifamily starts surged from 378k to 420k, the highest since late 2023. Over the past few years, there are several housing and mortgage market metrics that paint a fairly gloomy picture. Applications and builder confidence come to mind. While the construction data is not as strong as it was a few years ago, it remains one of the better examples of strength in the sector as it remains higher than most of the pre-pandemic time frame.
The National Association of Homebuilders (NAHB) and Wells Fargo released the monthly Housing Market Index (HMI) this week, showing builder confidence falling to the lowest levels since 2023. This is about as low as the index has been since the housing crisis more than a decade ago. While persistently high interest rates remain a top concern for the housing market, a growing number of builders cited difficulty pricing new homes in light of the rapidly changing outlook for material costs due to tariffs. With that in mind, it's important to note that 90% of this month's responses came in before the US/China trade announcement. Not only did that announcement drastically reduce tariffs for 90 days, it also offered a proof of concept that will likely see the outlook improve in the next survey due to lower material costs and a more upbeat consumer. Additional details are available at https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index.
Home purchase demand improved improved last week according to the MBA mortgage application survey. The improvement over the previous week was fairly modest, but the index was already the 4th highest reading of the past 2 years. Now it's the 5th highest and the latest update takes its place, moving within striking distance of longer term highs. It's no secret that most measures of mortgage and housing activity have been operating in a low, narrow range compared to where they were a few years ago. The mortgage rate spike of 2022 gets most of the credit for that, and a longer term chart of refinance demand helps contextualize shorter term trends. All that to say, we have to zoom in if we hope to see changes in application demand. In so doing, we find refinance activity still elevated relative to most of the past few years, but not in the 'boomlet' territory seen last Fall. The absence of significant week-over-week movement in refi demand makes good sense in light of minimally-changed mortgage rates. MBA logged a 0.02% increase in the average 30yr fixed rate from the previous week which aligns fairly well with our daily rate tracking. Since then, rates moved a bit higher through mid-week, but have dropped heading into the weekend. The net effect shouldn't be massive for application demand. Here's the MBA's surveyed changes in various rates and points (difference from last week in parentheses): 30yr Fixed: 6.86% (+0.02) Points: 0.68 (no change) Jumbo 30yr: 6.85% (−0.01) Points: 0.49 (+0.03) FHA: 6.59% (+0.03) Points: 0.89 (+0.02) 15yr Fixed: 6.12% (−0.05) Points: 0.59 (−0.06) 5/1 ARM: 6.09% (+0.12) Points: 0.74 (+0.43)
Both of the major purveyors of home price indices have been in agreement for the better part of a year that the average home is appreciating between 4 and 5 percent per year. The FHFA House Price Index showed only a 0.1% uptick in February while the Case Shiller Home Price Index rose 0.7%. In annual terms, Case Shiller was at 4.5% and FHFA fell from 5.0 to 3.9%. In the bigger picture, these changes don't amount to much. Things get a bit more interesting when we examine the monthly movement. First off, and more by way of a general backdrop, the past few years have seen a bigger gap between highs and lows compared to the norms established between 2014 and 2019. The more interesting month-over-month development is highlighted in the next chart. Simply put, FHFA's index dropped to 0.1 from 0.3. That's not a big deal in and of itself, but the plot thickens when we consider the following 2 facts: These indices are not seasonally adjusted (i.e. they show typical seasonal price patterns when viewed in a month-over-month interval) February (the most recent month available, released this week) almost always coincides with FHFA's index topping out for the year and Case Shiller's index in the midst of its normal springtime upswing. True to form, Case Shiller (the orange line) is seeing the normal upswing, even if at a more muted pace. But FHFA fell near the lowest levels of the past 12 months instead of peaking.
