While pending home sales increased in August, some economists say mortgage rates need to fall closer to 6% before the market can \u201cimprove more noticeably.\u201d<\/p>\n
Pending home sales showed surprising strength last month in what could be a sign that the housing market has taken a small step in the right direction.<\/p>\n
New contracts were up 4% in August compared to July<\/a> and up 3.8% year-over-year, according to the National Association of Realtors<\/a>. This beat the expectations of many forecasters<\/a>, who widely expected flat sales numbers as the summer wound to an end.<\/p>\n This latest data indicates that buyers are re-engaging \u2014 but caution remains, according to Odeta Kushi, deputy chief economist at First American. “Improvements in mortgage rates, affordability, and inventory are helping, but not yet driving a full recovery in housing demand,” Kushi said.<\/p>\n If mortgage rates continue to decline<\/a>, the drop would boost not only home sales, but refinancing \u2014 and that would be “a positive for near-term consumer spending,” according to Ryan Sweet, chief U.S. economist at Oxford Economics.<\/p>\n “Housing will find its footing and begin to improve more noticeably as the 30-year fixed mortgage rate closes in on 6%,” Sweet said.<\/p>\n Possible impact of a government shutdown: But mortgage rate volatility may begin this week if the federal government shuts down<\/a> on Oct. 1.<\/p>\n While government shutdowns typically result in lower mortgage rates<\/a>, this particular shutdown could stall a key jobs report slated for release on Oct. 3 \u2014 and that delay would leave investors with less information about what is happening within the economy.<\/p>\n A drop in inventory won’t help: While lower mortgage rates may entice some market activity, inventory could become real estate’s next hurdle as more sellers pull their home listings.<\/p>\n “The uptick in delisting activity<\/a> reflects the transitioning housing market, as would-be sellers take their home off the market when they are not getting offers at the price they had hoped for,” said Lisa Sturtevant, chief economist at Bright MLS.<\/p>\n Locked-in impact: All of these changes are occurring as the lock-in effect<\/a> widely attributed to pandemic-era mortgage rates loses impact. The share of U.S. homeowners with mortgage rates of 6% or higher rose to 19.7% in the spring \u2014 a 10-year high, according to Redfin data<\/a>.\u00a0<\/p>\n Meanwhile, the share of those who have rates below 6% has dropped from 92.7% in the second quarter of 2022. Redfin’s Sept. 29 report found that 52.5% of homeowners still have rates below 4%, down from 65.1% three years ago.<\/p>\n For now, mortgage rates “have not gone down significantly enough to move the needle,” according to Mariah O’Keefe, a Redfin Premier agent in Seattle who said buyers “need to see a bigger difference in their potential monthly payment before things are going to change.”<\/p>\n “If rates tick down below 6%, that will bring a lot of people back into the market,” O’Keefe added.<\/p>\n","protected":false},"excerpt":{"rendered":"While pending home sales increased in August, some economists say mortgage rates need to fall closer to 6%…\n","protected":false},"author":2,"featured_media":168791,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[84,467,56,54,55],"class_list":["post-168790","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-markets","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/168790","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=168790"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/168790\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/168791"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=168790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=168790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=168790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}