Real Estate
US pending home sales fall 7.3% in September as mortgage rates climb past 7%
Contract signings dropped in all four regions and were 11.3% lower than a year earlier, far worse than the 0.5% dip economists expected.
HedgeWeekly News Desk ·
Signed contracts to buy existing US homes fell 7.3% in September, the National Association of Realtors said on Tuesday, pulling its Pending Home Sales Index down to 66.0. The index was 11.3% lower than a year earlier. Economists had expected a 0.5% decline, according to FXStreet.
The weakness was broad. Pending sales fell 9.2% from August in the West, 8.2% in the South, 6.5% in the Midwest and 4.2% in the Northeast, and every region was down from a year ago, led by a 15.0% annual drop in the West.
NAR chief economist Lawrence Yun blamed fast-rising mortgage rates and said buyers and sellers may be waiting for borrowing costs to improve. He said rates could be topping out, but added that the path of energy prices and related inflation was highly uncertain. Freddie Mac's average 30-year fixed rate rose from 6.71% in the week of September 3 to 7.03% by September 24, and stood at 7.40% in each of its two most recent weekly surveys, about 1.1 percentage points above a year earlier.
Why it matters: September's fall is the largest monthly drop in the index this year, steeper than June's 5.4% slide, and it leaves the gauge well below June's 72.5 reading. With mortgage rates still at 7.40% in mid-October and markets pricing roughly an 89% chance of a Federal Reserve rate rise by December, according to Prime Terminal data cited by FXStreet, there is little sign yet of relief for buyers. For investors in homebuilders, mortgage lenders and housing-linked credit, Thursday's Freddie Mac survey is the next read on whether Yun's call that rates are peaking holds.