Mortgage Blog

Weekly Update September 27

September 27, 2024 | Posted by: Paul London

Mortgage Market Trends: What’s Really Going On?

Mortgage rates have dropped significantly over the last five months, leading to a surge in refinancing activity. However, we haven’t yet seen a similar uptick in homebuyer demand, leaving many wondering when (or if) that will happen.

Case-Shiller Report: Slower Growth, But No Need for Alarm

The Case-Shiller National Home Price Index rose by 0.18% in July, matching June’s growth. However, year-over-year growth slowed to 4.9% from June’s 5.4%. While price growth has clearly decelerated (up just 0.6% in the last three months), this was expected after the record-setting 47% growth in home prices between 2020 and 2023.

What's interesting is the significant variation between markets. Cities like Los Angeles and Seattle are seeing prices recover quickly, while Portland and Phoenix are still struggling to catch up to their 2022 peaks.

FHFA Data Echoes Case-Shiller

The FHFA National Home Price Index showed a similar trend, with prices rising just 0.1% month-over-month in June and 4.5% year-over-year. Over the past five months, the index has largely plateaued.

New Home Sales: A Mixed Picture

New home sales fell 4% month-over-month in August but rose 10% year-over-year. The annualized rate of 716,000 units sold is still solid, though not enough to address the ongoing housing shortage. It’s also worth noting that the median new home price dropped 5% year-over-year, largely due to a shift in sales to the more affordable South region, where homes are typically priced under $500,000.

Pending Sales: Disappointing Results

Pending home sales rose a modest 0.6% month-over-month in August. But despite a 130 basis point drop in mortgage rates over the last five months, the Pending Home Sales Index (PHSI) is still 4% below where it was in October 2023, when rates peaked at over 8%. Buyers may be holding out for even lower rates or anticipating market changes post-election.

Mortgage Rates: The Unexpected Climb

Despite recent Fed rate cuts, average 30-year mortgage rates have edged up slightly, confusing many. However, it’s not uncommon for the market to price in anticipated rate cuts before they are officially announced.

The Rise of “Stale” Listings

According to Redfin, nearly 48% of U.S. home listings have been on the market for 60 days or more— the highest rate since 2019. This increase in “stale” listings could present opportunities for buyers looking to negotiate.

Why Case-Shiller and FHFA Matter

Both Case-Shiller and FHFA use the “repeat sales” method to measure home price changes, providing a more accurate picture of price trends. While the national index has seen slow but steady growth, big cities like Seattle and New York are leading the way, with prices recovering quickly. On the flip side, cities like Phoenix and Denver are still down slightly year-to-date.

Looking Ahead: The Fed’s Next Moves

With the Fed Funds rate now sitting at 4.75–5.00%, the market is betting on further rate cuts in the coming months. In fact, there’s a 61% chance of a 50 basis point cut at the November FOMC meeting, with more reductions potentially following in December.

Final Thoughts

The housing market is in a period of transition. While mortgage rates are down, home prices continue to rise, and buyer activity hasn’t rebounded as expected. Whether this is a temporary lull or a sign of something larger remains to be seen, but for now, the market remains complex and full of opportunities for those who know where to look.

Back to Main Blog Page