October Home Sales Rise Slightly, Inventory Declines
- A modest increase in existing home sales in October offers a glimmer of hope, but rising mortgage rates adn the potential impact of the government shutdown cast a...
- Sales of previously owned homes in October rose 1.2% from September to 4.1 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors...
- It's crucial to remember this data reflects home closings, meaning the contracts were likely signed in August and september.
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Existing home Sales Rise slightly in October, But Gains May Be Fleeting
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A modest increase in existing home sales in October offers a glimmer of hope, but rising mortgage rates adn the potential impact of the government shutdown cast a shadow over the housing market’s future.
What Happened: October Home Sales Data
Sales of previously owned homes in October rose 1.2% from September to 4.1 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors (NAR). This represents a 1.7% increase compared to October 2022.
It’s crucial to remember this data reflects home closings, meaning the contracts were likely signed in August and september. This timing is notable, as it captures a period of fluctuating mortgage rates.
The Mortgage Rate Rollercoaster
The average rate on the 30-year fixed mortgage experienced volatility during the contract-signing period.Starting August at 6.63%, rates steadily declined to 6.13% by mid-September, offering a brief window of affordability.However, rates rebounded to 6.37% by the end of september, according to Mortgage News Daily. As of November 16, 2023, the average 30-year fixed rate stands at 7.24%, according to Freddie Mac.
This fluctuation directly impacts buyer behavior. Lower rates incentivize purchases, while rising rates cool demand. The recent increase is highly likely to dampen the momentum seen in October.
| Date | 30-Year Fixed Mortgage Rate (Average) |
|---|---|
| August 1, 2023 | 6.63% |
| September 15, 2023 | 6.13% |
| September 30, 2023 | 6.37% |
| November 16, 2023 | 7.24% |
Government Shutdown Concerns
While contract signings weren’t directly affected by the government shutdown that began in October, closings are potentially at risk.Specifically, transactions requiring flood insurance or government-backed rural home loans (like those from the USDA or VA) faced delays due to agency staffing and operational disruptions.
The shutdown’s impact on these specific loan types could create bottlenecks and postpone closings, further complicating the housing market’s trajectory. The longer the shutdown persists, the more significant the potential disruptions become.