Existing Home Sales Continue to Impress

By Taff Weinstein at

Existing Home Sales Continue to Impress

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.5% from June to a seasonally adjusted annual rate of 5.42 million in July. Overall sales are up 0.6% from a year ago (5.39 million in July 2018).

The median existing-home price for all housing types in July was $280,800, up 4.3% from July 2018 ($269,300). July’s price increase marks the 89th straight month of year-over-year gains.

Total housing inventory at the end of July decreased to 1.89 million, down from 1.92 million existing-homes available for sale in June, and a 1.6% decrease from 1.92 million one year ago. Unsold inventory is at a 4.2-month supply at the current sales pace, down from the 4.4 month-supply recorded in June and down from the 4.3-month supply recorded in July of 2018.

Properties typically remained on the market for 29 days in July, up from 27 days in June and up from 27 days in July of 2018. Fifty-one percent of homes sold in July were on the market for less than a month.

Source: National Association of Realtors

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) lost -15 basis points (BPS) from last Friday's close which caused fixed mortgage rates to remain at their best (lowest) levels of 2019 for the fourth week in a row.

Overview:  We had a very limited amount of economic data that hit, but what did get released was strong.  The markets focused on our Federal Reserve and the continued soap opera that is the trade negotiations between the U.S. and China.  On the Federal Reserve front, both the Minutes from the last Fed meeting and live speeches from Fed Chair Powell and numerous district Fed Presidents made it clear that the Fed is not on a predefined path to lower their Fed Fund Rate (which are NOT mortgage rates). 

The Talking Fed: Fed Chair Jerome Powell spoke at the Fed's Jackson Hole WY Economic Symposium. You can read the official release HERE
Here are few key highlights from his speech:

  • He said “based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective."
  • He cited/highlighted three negative developments since the last FOMC meeting: New Tariffs on China and from China, Further evidence of a global slowdown, notably in Germany in China and A sharp downward move of long-term bond rates around the world “to near post-crisis lows”
  • Fitting Trade Policy Into Risk-Management Framework Is a New Challenge
  • U.S. Economy Has Continued to Perform Well Overall
  • Monetary Policy Cannot Provide Settled Rulebook for Trade

We also got the Minutes from the last FOMC meeting where the Fed cut their interest rate by 1/4 point but saw 2 dissenting votes which is rare. You can read the official release HERE.
Here are a few key observations from reading the Minutes:

  • 2 voting members voted for NO rate decrease
  • 2 voting members wanted a LARGER decrease from -25 to -50 basis points
  • The Fed Minutes confirm that "most Fed officials see the July rate-cut as a 'mid-cycle adjustment" and not the beginning of an epic easing cycle that investors are demanding.
  • The rate cut was not to boost the economy but to mitigate risk
  • Participants continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes
  • A number of participants observed that overall inflation had continued to run below the Committee’s 2 percent objective, as had inflation for items other than food and energy
  • More QE? "the Committee could proceed more confidently and preemptively in using these tools in the future if economic circumstances warranted."
Taking it to the House: Weekly Mortgage Applications were basically flat with a small net change of under 1%.  Refinance Applications improved by 0.4% but Purchase Applications fell by -4.0%.  The July Existing Home Sales report was very strong with 5.42M units on an annualized basis vs est of 5.39M.  It also marks the first time in 17 months that the YOY data was on the plus side.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.



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