Interest rates and prices continued to curtail home sales in June. The Census Bureau and the Department of Housing and Urban Development reported on Wednesday that new home sales declined again last month, although the decline was far less severe than the 5.4 percent drop reported for pre-owned homes on Tuesday. Sales of newly constructed single-family homes were at a seasonally adjusted annual rate of 617,000 units , down 0.6 percent from the previous month’s rate of 621,000. The May figure was revised upward from the original 619,000 estimate. June sales in 2023 were at the rate of 666,000. This is 7.4 percent higher than the current figure. [newhomesall] On an unadjusted basis, sales in June totaled an estimated 53,000 units, down from 56,000 the prior month. Year-to-date sales total 356,000, only 0.5 percent of the total during the first six months of 2023. At the end of June, there were 475,000 new homes available for sale. This supply is estimated to be sufficient for 8.9 months at the current sales pace and is the amplest inventory since November 2023. Less than a quarter of those homes, however, are ready for occupancy. The median price of a new home sold in June was $417,300, $300 less than the median one year earlier. The average price dropped from $507,800 to $487,200. [newhomeprices] Sales in both the Northeast and Midwest moved lower in June. The Northeast was down 7.7 percent from May and 63.6 percent year-over-year and the Midwest lagged the two prior periods by 6.9 percent and 32.8 percent, respectively.
Home buyers remained on the sidelines as interest rates drifted lower, perhaps paying attention to the Federal Reserve’s musings about future cuts. The Mortgage Bankers Association (MBA) reports its Market Composite Index, a measure of mortgage loan application volume, decreased 2.2 percent on a seasonally adjusted basis last week and 2.0 percent before adjustment. There was a tiny increase in the Refinance Index from the prior week, 0.3 percent, and refinancing accounted for 39.7 percent of applications compared to 38.8 percent a week earlier. The Index was 38 percent higher than the same week in 2023. [refiappschart] The seasonally adjusted Purchase Index decreased 4.0 percent from one week earlier on both an adjusted and unadjusted basis and was 15 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates continued to ease, with the 30-year fixed rate dipping to 6.82 percent, the lowest level since February 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were up, driven by conventional and FHA application activity, as some borrowers took the opportunity to act. Furthermore, the conventional refi index was at its highest level since September 2022 .” Added Kan, “Purchase applications decreased as ongoing affordability challenges persist with rates at their current levels and with home-price appreciation still strong in many markets.”
Existing home sales fell in June, but the median sales price hit a record high as it had also done in May . The National Association of Realtors® said sales of previously owned single-family houses, townhouses, condominiums, and cooperative apartments receded by 5.4 percent compared both to May and sales in June 2023. Total sales were at a seasonally adjusted annual rate of 3.89 million units. Annual sales in the two earlier periods were at the rate of 4.11 million. Single-family home sales dropped 5.1 percent from May to a rate of 3.52 million in June and were 4.3 percent lower than a year earlier. The annual rate of existing condominium and co-op sales, estimated at 370,000 units, was 7.5 percent lower than the May number and 14 percent below the 430,000 sales posted a year earlier. [existinghomesdata] Home sales just missed the bottom of the range of forecasts from analysts polled by Econoday. Those estimates ranged from 3.90 million to 4.25 million with a consensus of 4.0 million. “We're seeing a slow shift from a seller's market to a buyer's market, ” said NAR Chief Economist Lawrence Yun. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.” Clearly, the shift to a buyers‘ market is not yet complete as prices continue to rise. The median sales price for all housing types in June was $426,900, an all-time high and an increase of 4.1 percent from the June 2023 median of $410,100. Single-family home prices were also up 4.1 percent to $432,700. The increase in condo prices was more modest, 2.6 percent, resulting in a median of $371,700. [existinghomeprices]
Mortgage application activity staged a moderately strong recovery from the previous holiday-shortened week, although the recovery was attributable solely to the refinance side of the business. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, increased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index was up 30 percent. The Refinance Index surged by 15.0 percent compared to the previous week and was 37 percent higher than the same week one year ago. The refinance share of mortgage activity jumped to 38.8 percent of total applications from 34.9 percent and was the largest since mid-December 2023. [refiappschart] Purchasing on the other hand declined 3.0 percent after seasonal adjustment although it was up 22 percent before it. The Purchase Index was 14 percent lower than during the same week one year ago. [purchaseappschart] “Mortgage rates declined last week, as recent signs of cooling inflation and the increased likelihood of Fed rate cuts later this year pulled them lower. The 30-year fixed rate declined to 6.87 percent, the lowest rate since March 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Application activity was up 4 percent, driven by a 15 percent jump in refinances to the highest level since August 2022. While FHA and VA refinance applications accounted for a significant share of the increase, these are likely recently originated loans with even higher than current offered rates. Even with last week’s rate decline, purchase applications continue to lag, down 14 percent compared to last year’s pace.”
The National Association of Home Builders (NAHB) blamed high interest for lagging new home sales and the resulting dampened industry confidence in building them. NAHB chief economist Robert Deitz said mortgage rates averaged 6.92 percent last month and rates for construction and development loans were also elevated. The NAHB/Wells Fargo Housing Market Index (HMI), an indicator of home builders’ confidence in the market for newly constructed homes, was down 1 point in July to 42, the lowest reading since last December. Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The HMI index charting current sales conditions in July fell 1 point to 47 and the gauge charting traffic of prospective buyers also declined by a single point to 27. The component measuring sales expectations in the next six months increased 1 point to 48. Deitz said that, while buyers seem to be waiting for lower interest rates, the six-month sales expectation for builders moved higher, indicating that builders hope for lower rates later this year as inflation data are showing signs of easing.
Mortgage applications declined slightly on a seasonally adjusted basis last week but plummeted on an unadjusted basis during the July 4th week. The week’s results include an additional adjustment to account for the holiday. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 0.2 percent on a seasonally adjusted basis from one week earlier but lost 20.0 percent before adjustment. The Refinance Index decreased 2.0 percent from the previous week but was 28.0 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 34.9 percent of total applications from the previous 35.7 percent. [refiappschart] The seasonally adjusted Purchase Index managed a 1.0 percent gain while the unadjusted Purchase Index dropped 19.0 percent. The purchase index was 13.0 percent lower than the same week one year ago. [purchaseappschart] “The recent uptick in mortgage rates has slowed demand. Mortgage applications were essentially flat last week, as mortgage rates remained around 7 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase activity picked up slightly, driven primarily by increases in FHA and VA applications. Refinance applications decreased for the fourth consecutive week, in line with higher rates. Although home equity gains have been significant in recent years, most borrowers do not have much of an incentive to refinance at current rates. ”
Higher interest rates knocked mortgage application volume back last week. But, while purchase volume appears to lose ground year-over-year, refinancing activity is steadily improving compared to the same week in 2023. The Mortgage Bankers Association said its Market Composite Index, a measure of that application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier and rose 8.0 percent on an unadjusted basis. The Refinance Index was down 2.0 percent compared to the week ended June 20 and was 29.0 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 35.7 percent of total applications from 35.1 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index fell 3.0 percent from one week earlier. The unadjusted Purchase Index increased 7.0 percent compared with the previous week and was 12.0 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates moved higher last week, crossing the 7 percent mark, even as the latest inflation data has kept market expectations alive for a rate cut from the Fed later this year,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months. Refinance activity also remains subdued – although there was a slight increase in applications for conventional refinance loans.”
May turned out to be a dismal month for home sales. Sales of existing homes dipped a modest 0.7 percent from April, but new home sales fared far worse. The U.S. Census Bureau and Department of Housing and Urban Development report that sales of newly constructed single-family homes were at a seasonally adjusted annual rate of 619,000 units during the month. This is 11.3 percent below the sales level in April and down 16.5 percent compared to May 2023. However, April sales, originally estimated at 634,000 units, was upgraded to 698,000. Analysts had expected a better performance. Those polled by Econoday had a consensus forecast of 650,000 units. On a non-adjusted basis, 56,000 homes were sold during the month compared to 62,000 in April. Inventories continued to improve. At the end of May, there were 481,000 homes available for sale, nearly 13 percent more than a year earlier. The increase in availability is more apparent in the context of current sales. The inventory for May is projected to be a 9.3-month supply at the current sales rate. This is a 14.8 percent increase from April and 34.8 percent from a year earlier. The median price of a home sold in May was $417,400 compared to $421,200 in May of 2023. The average price rose, however, increasing from $495,800 to $520,000. May sales fell compared to the previous month in all four regions and rose year-over-year in only one. In the Northeast, sales plummeted 43.8 percent compared to both April and the prior May. Midwest sales were down 8.6 percent for the month but rose 12.2 percent on an annual basis. The South saw decreases of 12.0 percent and 17.7 percent, respectively, from the two earlier periods. Sales slowed by 4.5 percent in the West and were down 20.9 percent from May 2023.
Slightly lower mortgage rates failed to impress potential borrowers last week. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, ticked up 0.8 percent on a seasonally adjusted basis from one week earlier but was down 10.0 percent before adjustment. The Refinance Index was essentially unchanged from the previous week and was 26.0 percent higher than the same week in 2023. Refinancing accounted for 35.1 percent of total applications compared to 35.2 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index gained 2.0 percent from one week earlier. Applications were down 10.0 percent on an unadjusted basis and 13.0 percent lower than the level the same week one year ago. [purchaseappschart] Volume data includes an adjustment for the Juneteenth holiday. Mortgage rates were mostly lower last week, with the 30-year fixed rate declining slightly to 6.93 percent, the lowest level in more than three months,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Lower rates, however, were still not enough to entice refinance borrowers back, as most continue to hold mortgages with considerably lower rates. ” Added Kan, “Purchase applications did see a small increase after adjusting for the Juneteenth holiday. Government purchase loans, primarily FHA and VA, saw gains of more than 2 percent over the previous week, as homebuyers in those segments sought to take advantage of the recent rate relief.”
Two major home price indexes had very different conclusions about the growth of annual home prices in April, but each showed a significant month-over-month uptick. The S&P CoreLogic Case-Shiller U.S. National Home Price Index fell off its March pace while the Federal Housing Finance Agency’s (FHFA’s) Home Price Index (HPI) moved higher. Case-Shiller’s non-seasonally adjusted National Index April covering all nine U.S. census divisions, moved from 0.7 percent annual growth in March to a 0.2 percent decline in April. Both composite indexes increased on the rate of decline posted the previous month. The 10-City, which was down 0.7 percent on an annual basis the prior month lost 1.2 percent in April while the 20-City posted a 1.7 percent year-over-year loss, down from 1.1 percent in the previous month. Miami reported the highest 12-month gains among the 20 cities in April at 5.2 percent. Chicago debuted in the top three in second place with a 4.1 percent gain and Atlanta pushed Charlotte out of third place, increasing by 3.5 percent. Annual price changes were lower than the prior month in 17 of the 20 cities. Only Boston, San Francisco and Cleveland managed to increase their appreciation rate. Monthly changes were all positive. Before seasonal adjustment, the U.S. National Index posted a 1.3 percent month-over-month increase in April while the two composites were 1.7 percent higher. After seasonal adjustment, the National Index posted a month-over-month increase of 0.5 percent, while the 10-City and 20-City Composites gained 1.0 percent and 0.9 percent, respectively.
