February 22, 2024 16:32 GMT
Existing Home Sales Set To Stay Stagnant As Mortgage Rates Tick Back Up
US DATA
January existing home sales were roughly as expected, at 4.00mln (SAAR), vs 3.97mln expected and a 3.1% gain vs 3.88mln in December (upwardly revised from 3.78mln, with each of the preceding 3 months also revised up).
- The uptick in January meant the highest sales volume since August 2023, but to put this into context, it is just months after briefly hitting the lowest reading post-2010 (3.85mln in Oct 2023).
- From a regional perspective, sales increased in each of the Midwest, South, and West regions, but were flat in the Northeast.
- With supply remaining constrained as existing homeowners resist giving up long-term fixed mortgages at lower-than-prevailing rates, months of inventory fell by 0.1 month to 3.0, the lowest since April 2023.
- Median sales prices rose for a 7th consecutive month, by 5.1% to $379,100, but reflective of the inert mortgage borrowing market, 32% of transactions in January were all-cash, up from 29% a year ago.
- With mortgage rates beginning to tick higher again as implied Fed rate cut probabilities fade, pulling back on borrowing activity (as we pointed out in our note on MBA mortgage applications on Wednesday), it's unlikely that existing home sales will see a resurgence in the near future.
- Conversely, new home sales (data out Monday) - which are less affected by the above dynamics - are expected to maintain their general uptrend since mid-2022 (+3.0% seen in Jan, after +8.0% in Dec).
Source: NAR, MNI
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