As the cycles of monthly and quarterly data ebb and flow, there are certain data series or elements that have been imported at different times. While there are plenty of economic data points that warrant consideration, the most consistently important releases cover employment, inflation, and economic growth. The upcoming calendar features significant updates on all these things and more.
Some periods of time are different by design, such as one that features a highly contested election with a highly uncertain outcome. In less than two weeks, Americans will go to the polls to make consequential choices that at least some would prefer not to make at all. "Elections have consequences" as one shopworn phrase goes, and that's true, even if the outcome of having made one choice over another isn't readily knowable.
Existing home sales remained muted in September. Largely reflective of demand in late July through August, sales declined by 1%, according to the National Association of Realtors, easing to a 3.84 million annual pace. Mortgage rates were still high and firm at the end of July but did start to decline in early August, pulling at least a few buyers into the market (the lowest recent mortgage rates came in September, which may be reflected in October or even November sales tallies). The slight slackening in the pace of sales helped expand the number of homes available to buy, which increased by 1.5% to 1.39 million units, a 4.3-month supply. The 4.3-month inventory-to-sales ratio is the highest it has been in more than five years, so there are somewhat more homes available for buyers who can afford them. The median price of an existing home sold in September was $404,500, up 3% compared to last September; that said, it is also now 5.25% below the 2024 record peak of $426,900 in June, as typical seasonal cooling in home prices is starting to be seen.
Sales of newly constructed homes have been holding up well, running as they are at pre-pandemic levels. Sales of new homes rose by 4.1% in September to a 738,000 annual pace, good enough to be the second fastest clip in more than two years, and the highest since May 2023. Supplies of new homes also remained plentiful, as the 470K annualized units available was both a 7.6-month supply at the present rate of sale and the highest units available figure since March 2008. Prices of new homes have been very competitive with those for existing homes, but the $426,300 median sales price was up by $15,400 compared to August, if nearly the same as it was in September 2023 ($426,100 back then).
Firming mortgage rates have again damped mortgage activity. According to the Mortgage Bankers Association, applications for mortgage credit dropped 6.7% in the week ending October 18. Requests for funds to purchase homes declined by 5.1%, part of a three-week skid, while those to refinance existing mortgages dropped 8.4%, a fourth consecutive decline. Since September 20, refinancing applications have dropped off by about 50%, so activity has again slowed to early August levels.
Last week, we thought that the adjustment by investors regarding Fed policy was complete. As it turned out, that was not quite right, and mortgage rates legged a bit higher. The yields that underlie mortgage rates closed trading on Friday near their highest points of the week, and as the cascade of fresh data doesn't start until Tuesday, there's not enough time to significantly impact mortgage rates much or influence their direction by the time the next update on them comes. Based on current conditions, we'd expect to see perhaps a 4-6 basis point increase in the average offered 30-year fixed-rate mortgage as reported by Freddie Mac Thursday.
