More tempered pending home sales on Thursday dampened excitement generated by bullish data earlier in the week, while mortgage data provided little new fodder for what have been increasingly optimistic takes on the housing industry.
Data earlier this week showed new home sales rose 5.7% in September to 389,000, and the FHFA home price index ticked up 0.7% -- better than expected on both counts. They followed even rosier data on housing starts and building permits -- up 15% and 12%, respectively, the week prior.
On Thursday, the National Association of Realtors reported that pending home sales rose for the 17th straight month on a year over year basis -- with all regions but the West showing double digit growth over the same time last year. But growth of 0.3% month over month, in September from August, underwhelmed expectations. It followed an even more underwhelming decline in August over july of 2.6%.
"Pending" sales are a forward looking indicator based on contracts signed. Although home contracts are elevated compared to recent years, they "appear to be bouncing around in a narrow range," says Lawrence Yun, NAR chief economist. "This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013."
Mortgage rates reversed last week according to data released by Freddie Mac on Thursday. The 30-year fixed rate rose to 3.41%, its highest in five weeks. The 15 year rate ticked up to 2.72% from 2.66%, the highest in a month. The changes are still relatively insignificant when you look at the longterm chart of rates (see chart below). Last year at this time, the 30-year rate was at 4.1%.
Rates "... should continue to support the housing market and mortgage refinance," said Frank Nothaft, vice president and chief economist at Freddie Mac.
As rates edged higher, mortgage application volume decreased 12% last week, with a drop in both new home loan applications and refinancing applications, according to data from the Mortgage Bankers Association.
The refinance share of the index fell 13% and the seasonally adjusted purchase index fell 8%.