I try and share these with you about once a month. This one is from Monday of this week. FULL OF INFO!!!
October 21, 2024 – California home sales dropped to the lowest level in nine months but will likely improve, albeit slowly, as the market enters the final quarter of 2024. In the latest sale & price report, the number of opened escrows once again exceeded last year’s levels for the third consecutive month and point to an increase in home sales in October. The median home price in California continued growing for fifteen consecutive months, but at a more moderate pace, and is expected to continue moderating for the rest of year. With prices expected to soften and rates likely to normalize by the end of the year, the fourth quarter is a window of opportunity for homebuyers on the sideline to re-enter the market. In the broader U.S. market, housing starts dipped 0.5%, with single-family construction holding steady while multifamily development slowed. The economy remains solid with retail sales showing strong growth, despite concerns about consumers’ financial wellbeing and a slowing job market.
California home sales take another step back despite falling mortgage rates: Closed escrow sales in September for existing single-family homes in California dipped 3.4% month-over-month and reached an annualized rate of 253,010. This was the lowest sales level in nine months despite mortgage rates falling below 6.5% for the first time in over a year in August when most sales opened escrow. On a year-over-year basis, sales rose by 5.1% and nudged the year-to-date sales figure up 0.9% through the first nine months of the year. Meanwhile, statewide pending sales surpassed last year’s level for the third consecutive month, suggesting an increase in closed sales in the month ahead. The rebound in mortgage rates since early October, however, could slow sales’ growth pace and may result in softer-than-expected housing demand in the fourth quarter.
Slower price growth creates opportunity for homebuyers in Q424: The statewide median home price in September continued to grow year-over-year for fifteen consecutive months, with an increase of 2.9%, which was the smallest gain since July 2023. On a month-to-month basis, prices dropped 2.3%, a dip larger than the historical seasonal decline observed in more than five decades. A smaller share of higher-priced homes in the mix of sales could be a contributing factor on the slower growth in the overall statewide median price. Housing inventory, on the other hand, has been improving steadily in recent months as the market enters the off-peak homebuying season which also might have applied downward pressure on home prices. With home prices expected to ease further in the coming months, the fourth quarter may present a good buying opportunity for those who have been on the sideline, especially since interest rates are expected to gradually move back toward their historical norms before the end of the year.
Mortgage rates surge to highest levels in three months: Mortgage rates have risen sharply since early October as hopes for a big rate cut by the Fed continues to fade after the release of a strong job report. The average 30-year fixed rate mortgage (FRM) on October 21, in fact, surged to the highest level since July, according to Mortgage News Daily. Rates have gone up from near 6% in mid-September to almost 7% for top-tier 30-year fixed loans. Today's sharp increase came without a clear explanation, as no significant economic report or event was released or took place that triggered the jump. While several theories have been proposed, including shifting election odds, options market dynamics, and concerns over U.S. deficits, none seem sufficient to explain the rapid rise. This marks one of the largest rate increases in recent months, particularly on a day without a major economic catalyst. Rate fluctuations could continue until after early November, as the upcoming jobs report, the presidential election, and the Federal Reserve's rate announcement are all key events that could create volatility in the market.
US housing starts ease on decline in multifamily construction: In September, overall housing starts dipped 0.5%, reflecting a pullback from August's significant rise. Single-family construction, however, remained resilient with its second consecutive increase, primarily due to its three-month uptrend in permits. Lower mortgage rates, driven by the Federal Reserve's easing cycle that began in September, are expected to further boost single-family development despite ongoing financing challenges. In contrast, multifamily construction continues to struggle, with declines in both starts and permits as higher vacancies and reduced credit access weigh on new projects. Although some regions, like the South, show stronger activity in multifamily permits due to population growth, the broader trend for multifamily development remains weak. Builders remain optimistic about single-family housing, with the NAHB Housing Market Index rising in October, signaling improved expectations for the future.
Retail sales post solid gain, showcasing a resilient economy: U.S. retail sales exceeded expectations in September with a 0.4% overall increase, and posted a stronger-than-anticipated 0.7% increase after excluding sales at auto dealers and gas stations. Control group sales, which align with consumer spending in GDP calculations, also rose 0.7%, marking the largest increase in three months. Despite concerns about consumer financial health and potential labor market weakening, consumer spending remained resilient, as 10 of the 13 major retail categories saw increases. However, auto sales remained flat, and gas station sales declined, largely due to price fluctuations. Overall, consumer spending continues to support economic growth and will likely be reflected in the GDP number for Q3 to be released next week.
