We deserved a break, and we got one. After avg. 30-yr mortgage rates rose to nearly 7.5% last week, they’ve quickly dropped back to near 7% on economic data that evidenced a slowing economy and dovish (‘we’ve done enough’) comments from existing and past Federal Reserve presidents.
The crash that wasn’t
The Case-Shiller national home price index rose 0.7% MoM in June (the 5th-straight increase) and is now just a whisker below the June 2022 peak. The very modest 2.7% decline in home prices experienced in the 2nd half of 2022 has already been erased. And home prices in 10 of the 20 big cities tracked separately by Case-Shiller are already at record levels!
Good news for mortgage rates
Early signs of the job market loosening (ADP payrolls), plus the downward revision of 2Q 2023 GDP (from 2.4% –> 2.0%) and dovish (‘we’ve done enough’) comments from current and past Federal Reserve presidents were just what we needed after average 30-year mortgage rates hit a new peak of 7.49% last week. Now we’re back near 7% and the market is pricing in a 90% chance of no rate hike on Sept 20.
A thin market
Good news: the National Association of Realtors’ Pending Sales Index (which tracks new contract signings for existing homes) rose 0.9% month-over-month to 77.6. That’s actually impressive when you consider how high mortgage rates and low home inventory were in August. Not-so-good news: an index level of 77.6 implies transaction activity similar to 2008 (post-GFC).
Local Market Trends
Pending home sales were up for the second consecutive month in July, according to data from the National Association of Realtors (NAR).
| Area | Median Price | Active Listings | New Listings – 5 days | Median Days on Market |
|---|---|---|---|---|
| Scottsdale, AZ |
$975,000
|
1428
|
95 |
51
|
| Gilbert, AZ |
$640,000
|
431
|
68 |
26
|
| Phoenix, AZ |
$539,300
|
2041
|
244 |
36
|
| Mesa, AZ |
$528,490
|
704
|
104 |
30
|
