By Mike Bodeen · 6 November 2023
Before we get to the mortgage rate news, let’s take a look at October’s ARMLS numbers, with gratitude, as usual, to the Cromford Report. This week, we’ve added some new home stats as well.
Active Listings: 15,247 vs 20,582 last year – down 26% – but up 14% vs 13,404 last month
Under Contract Listings: 6,028 vs 6,578 last year – down 8.4% – and down 7.2% from 6,499 last month
Monthly Sales: 5,177 vs 5,420 last year – down 4.5% – and down 5.4% from 5,472 last month
Monthly Average Sales Price per Sq. Ft: $295 vs $277 last year – up 6.7% – and up 3.4% from $285.40 last month
Monthly Median Sales Price: $435,000 versus $436,000 last year – down 0.2% – but up 0.7% from $432,000 last month
There were 1,480 closed new homes, up 5% from 1,410 in October 2022 but down 9% from September.
The new home median sales price was $538,422, up 1.8% from October 2022 and up 12% from September.
Current inventory increased (as of Nov 4th) 14% compared with last month – a huge increase over both 2020 and 2021’s numbers at this point in time. In further evidence of our slowing market, listings under contract have dropped from last month (8.4%) and last year (7.2%). Likewise, sales dropped 4.5% from last year, and fell 5.4% from last month.
Resale prices rose this past month. The monthly average sales price Per SqFt ($277) rose 6.7% from 2022 and also increased 3.4% from last month. I’m not sure how long these lagging price increases will continue considering the inventory increase, and sales decrease, but it seems like all conventional economic thinking has been thrown out the window anyway.
New home sales increased 5% from October 2022 but dropped 9% from this past September. And new home median pricing ($538,000) was up almost 2% compared with last year, but hugely up 12% from last month. Cromford indicated that this huge increase occurred due to builders no longer selling build-to-rent home communities, which included a lower bulk price tag.
Now, mortgage rates were the big story at the end of last week. According to Housingwire.com, a softer jobs report and the Federal Reserve’s decision to forego or slow rate increases for the time being, among other economic news, combined to send mortgage rates tumbling to the mid 7% range. Some lenders were even quoting rates in the upper 6% range including 1-2 discount points.
This is great news for buyers but is it good enough to bring them back into the market? I think some will. If rates are able to show more downward movement, more buyers will follow, thinking this might be a brief window. Still others will hope rates will go even further.
Now here’s a wild card I throw out to you. If you recall, when the pandemic broke out, there was an initial negative market reaction where homes went up for sale, and prices temporarily slowed. Then that negative market reversed itself and a huge home selloff occurred ultimately resulting in huge price increases culminating in near record low inventory recently.
So, my question is this: Will the current war in the middle east, and rumors of more fronts opening up greatly threatening world security, have a similar pandemic effect of home sales increasing again reducing inventory and increasing prices?
I have the answer: All things are possible!
Market data referenced in this article comes from The Cromford Report.