Lawler: Early Read on Existing Home Sales in October

Chart of the Week: Mortgage Rates Follow MBS Yields

Early Read on Existing Home Sales in October

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 3.94 million in October, down 0.5% from September’s preliminary pace and down 11.3% from last October’s seasonally adjusted pace. Unadjusted sales should show a smaller YOY decline, reflecting this October’s higher business day count relative to last October’s.

Local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 3.9% from last October.

The National Association of Realtors (NAR) is scheduled to release October existing home sales on Tuesday, November 21, 2023, at 10:00 AM ET. The consensus is for 3.93 million SAAR.

Chart of the Week:  Mortgage Rates Follow MBS Yields, Not 10-Year Treasury Yields

For an explanation of “why”, see Lawler: Update on Mortgage/Treasury Spreads

From Tom Lawler:

30 Year FRM: Optimal Blue Conventional Conforming 30-year Fixed-Rate Mortgage where LTV<=80% and FICO>740.

CC MBS Yield: Yield on notional par agency 30-year MBS

Note: there is some “spurious” volatility in the mortgage spreads because Optimal Blue measures rate lock activity throughout the day while the MBS and Treasury yields reflect late afternoon yields.

California Home Sales Down 12% YoY in October, Prices Up 5% YoY, Inventory Declines

California doesn’t report monthly inventory numbers, but they do report the change in months of inventory. Here is the press release from the California Association of Realtors® (C.A.R.): California home sales remain muted in October as elevated interest rates keep homebuyers and sellers on the sideline, C.A.R. reports

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 241,770 in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2023 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

October’s sales pace was up 0.3 percent on a monthly basis from 240,940 in September and down 11.9 percent from a year ago, when a revised 274,410 homes were sold on an annualized basis. Sales of existing single-family homes in California remained below the 250,000-unit pace for the second consecutive month. The annual decline was the 28th straight drop, but the decline was the smallest in the last four months. …

Home prices rose again from the year-ago level for the fourth straight month, as the statewide median price recorded its largest year-over-year gain in 17 months. California’s statewide median price dipped 0.4 percent from September’s $843,340 to $840,360 in October and rose 5.3 percent from a revised $798,140 recorded a year ago. While October’s median price took a step back from the month prior, the month-to-month decline was smaller than the long-run September-to-October price adjustment of -1.5 percent observed in the last 44 years. …

Active listings at the state level continued to dip on a year-over year basis for seven straight months, and a further decline in each of the last six months all registered more than 20 percent year-over-year. …

New active listings at the state level dropped from a year ago for the 16^th consecutive month, but the rate of decline continued to decelerate. In fact, newly added for-sale properties dipped less than 10 percent for the first time in 12 months. The smaller year-over-year rate of decline was partly due to low-base effects though, as new active listings in October 2022 also recorded a sizeable drop from the prior year.

emphasis added