Although there was little major economic news released over the past week, mortgage rates continued to rise, as investors worry about higher inflation.
Sales of existing homes in September rose 7% from August but still were a little lower than a year ago. Inventory levels were down 13% from a year ago, at just a 2.4-month supply nationally, well below the 6-month supply which is considered a healthy balance between buyers and sellers. The median existing-home price was 13% higher than last year at this time at $352,800.
Also notable, the mix of homes currently selling has been changing. Sales of homes priced between $100,000 and $250,000 were 23% lower than a year ago. Rising prices and competition from investors have made it more difficult for buyers to find affordable homes, especially at the lower end of the market. By contrast, sales of homes priced above $1,000,000 jumped 30% during that period. One consequence is that first-time buyers made up just 28% of sales in September, the lowest level since July 2015.
With the shortage of available homes in many areas, investors have been closely watching the monthly reports on housing starts, and the most recent data contained mixed news. In September, overall housing starts unexpectedly declined from August, but still were 7% higher than a year ago. However, the weakness was seen in multi-family units, while single-family starts were roughly flat from August. Rising prices and shortages for land, materials, and skilled labor remained obstacles to a faster pace of construction.
The Department of Labor releases the total number of new claims for unemployment insurance each week, and the latest reading was 290,000, the lowest level since March 2020 near the start of the pandemic. This was down significantly from the inflated figures in the millions seen last spring during the partial shutdown of the economy, and just a little above the readings around 250,000 which were typical during 2019.
Looking ahead, investors will closely watch Covid case counts around the world. They also will look for hints from Fed officials about the timing for changes in monetary policy. Beyond that, the next European Central Bank (ECB) meeting will take place on Thursday. Third quarter gross domestic product (GDP), the broadest measure of economic activity, also will be released on Thursday. The core PCE price index, the inflation indicator favored by the Fed, will come out on Friday.
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Raleigh Mortgage Group, Inc.
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