Days on Market Grow Despite Low Inventory for Existing Homes

* Homebuilding Continued its Slump in October as Both New Starts and Building Permits Fell. The pace of new construction continued its downward trend in October, as both new home starts and permits for future activity fell, the Census Bureau and the Department of Housing and Urban Administration said on Thursday. Starts fell 4.2% from September while permits declined by 2.4%. They are 8.8% and 10.1% lower than a year ago, respectively. On Wednesday, the National Association of Homebuilders released its confidence index for November, showing the 11th consecutive monthly drop. The index is now at its lowest point since 2012, excluding the decline at the start of the coronavirus pandemic.

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* Mortgage Rates Plunge, Largest Weekly Drop Since 1981. Mortgage rates dropped sharply last week following a series of economic reports that indicated inflation may finally be easing. The 30-year fixed-rate mortgage averaged 6.61% in the week ending November 17, down from 7.08% the week before, according to Freddie Mac, the largest weekly drop since 1981. Mortgage rates have risen throughout most of 2022, spurred by the Federal Reserve’s unprecedented campaign of hiking interest rates in order to tame soaring inflation. In the last week, two key inflation reports – the Consumer Price Index and Producer Price Index – showed that prices rose at a slower pace than expected in October, suggesting inflation is inching in the right direction, and has perhaps even peaked. While the Fed does not set the interest rates borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they make moves which send yields higher and mortgage rates rise. “The 10-year Treasury dropped from 4.15% last Wednesday to 3.68%, as capital markets seemed to cheer the slowdown in inflation as a sign that the Federal Reserve’s monetary tightening is having its intended effect,” George Ratiu,’s manager of economic research said. Mortgage applications increased for the first time in seven weeks, according to the Mortgage Bankers Association, with both purchase and refinance applications up.

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* Days on Market Grow Despite Low Inventory for Existing Homes. The National Association of Realtors (NAR) reported Thursday on two trends in existing home sales that we have seen for many months now: sales are declining while total inventory data has fallen directly for the three straight months. On a positive note, however, the days on the market are no longer a teenager anymore: that metric grew from 18 days to 21 days. Total housing inventory fell in this report, the third report in a row that shows total inventory has decreased. NAR lists the currentinventory at 1.22 million, while historical normals are between 2 million to 2.5 million, with a peak in 2007 a tad over 4 million. The monthly supply grew from 3.2 months to 3.3 months. The median existing-home price for all housing types in October was $379,100, a gain of 6.6% from October 2021.

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