From CNBC:
Pending home sales fell 10% in September, much worse than expected
Pending home sales, a measure of signed contracts on existing homes, dropped a much worse-than-expected 10.2% in September from August, according to the National Association of Realtors.
Economists had predicted a 4% decline. Sales were down 31% year over year.
This marks the lowest level on the pending sales index since June 2010, excluding April 2020, when the Covid pandemic was in its early days.
Realtors point squarely to sharply higher mortgage rates, which had sat at record lows for the first two years of the pandemic. The average rate on the popular 30-year fixed mortgage was right around 3% at the start of this year, but then rose swiftly, crossing 6% in June, according to Mortgage News Daily. It pulled back a bit in July and August, but then began rising again, crossing 7% in September, when these contracts were signed.
…
Regionally, pending home sales dropped 16.2% month to month in the Northeast and were down 30.1% year over year. In the Midwest, sales were down 8.8% for the month and 26.7% from one year ago.
In the South, sales retreated 8.1% for the month and were down 30.0% year over year, and in the West, the most expensive region in the nation, sales fell 11.7% for the month and were down 38.7% from the year before.
If you’re lender, how low will you go on the fixed rate to get someone’s business? Will the competitors try to go lower or will they all stay at a standard rate, hold steady and leave not a penny less on the table? If I’m a lender and offer you a 5.5% 30 year fixed rate right now, am I shooting myself in the foot or generating business? What do you guys think?
Regionally, pending home sales dropped 16.2% month to month in the Northeast and were down 30.1% year over year.
Wow. Missed this part. Secure the hatches mates!
I’m not quite sure on the criteria for unloading your loan onto the US government or another entity but literally, every loan gets sold off within a week. I imagine someone could take all the business going slightly below the rate and getting all the action. They shouldn’t really care as they are unloading it off on someone else anyway.
Economists had predicted a 4% decline. Sales were down 31% year over year.
When I predicted this early in 2022 many on this board said I was WAY off base, it aint over baby!
Artificial, zero/ low rates destroys the markets/ economy. Who knows what’s out there that will break, that were covers up and papered over by artificial rates.
Falling sales is more about the economy than the price dropping. It’s going to kill the mortgage and real estate industry first. Then it’s going to hurt all the businesses that depend on home purchases to sell their products…this could range from home depot and its suppliers to your local plumber or moving business. All this will result in a massive unemployment rate. Then and only then will home prices drop significantly.
Too bad this will never happen as the Fed will pivot. If Fed doesn’t pivot, govt will step in with some kind of stimulus.
This is the reality folks. If you are expecting a massive drop in price or for a non existent sales environment to last long, you are not paying attention. All the Fed did was put a hold on the housing market for a year or two max. They don’t want deflation which makes debt impossible to pay off…
It wasn’t artificial rates. It was the rates needed to keep the economy going; trying to avoid deflation.
3b says:
October 30, 2022 at 10:22 am
Artificial, zero/ low rates destroys the markets/ economy. Who knows what’s out there that will break, that were covers up and papered over by artificial rates.
The margins on a mortgage aren’t that big. You know when you buy down the rate with points. There is a reason it costs what it does. It is simple bond math. Time value of money and current market conditions. Look at a lender and then see what rate is offered buying down points. It will give you an order of magnitude.
Fast Eddie says:
October 30, 2022 at 8:39 am
If you’re lender, how low will you go on the fixed rate to get someone’s business? Will the competitors try to go lower or will they all stay at a standard rate, hold steady and leave not a penny less on the table? If I’m a lender and offer you a 5.5% 30 year fixed rate right now, am I shooting myself in the foot or generating business? What do you guys think
The mortgage people are the same as the finance people at auto dealerships. They only know their rate sheets and the numbers their software spits out. And of course the cost+profit.
Down in Toms River for soccer, west of the parkway, huge amount of new townhouse developments and strip malls being built up and down the Rt 9 corridor.
Lakewood spillover
Touch a little more on my earlier post:
Housing runs the economy. Gloom has hit that market and it will bleed into the rest of the economy. Simple as that.
There will be pain in the frothy real estate markets from nashville to tampa to austin to salt lake. Majority of the market that didn’t double will sell POS’s at 10-20% discounts till the market comes back. So POS’s in our location will be had for deals, but gems will stagnate.
This is the way…
“We are going to short these markets to the bottom and we are going to buy the generational lows. Then we purchase homes for our families and compound asset returns for the next 20 years. We will have financial freedom for our family and we will have more time to spend with them.”
And I stand by this simple breakdown of a complicated equation known as the economy. I can’t break it down into simpler terms. Keep it simple.
Housing runs the economy. Gloom has hit that market and it will bleed into the rest of the economy. Simple as that.
“Being in your 20’s in the mid-late 2000’s was an interesting time of overlapping cultural/media spheres of influence — still talking to your college friends, TV was still dominant but losing its grip, internet culture wasn’t yet a monoculture, blogs were emergent, etc.”
“2005-06 was the sweet spot for me. Blogs in full swing but still niche enough to make connections with people. Sites like Deadspin taking off. YouTube and Flickr. Facebook was still novel (especially before it opened to everyone) and bridged the gap w/ppl you’d lost touch with.”