Slowing Trend in US Home Sales Likely to Keep the FED Steady

Skerdian Meta•Wednesday, November 22, 2023•2 min read

The US economy has been showing resilience in the last two years, with prices surging and the FED raising interest rates at an enormous pace, to 5.25%-5.50%, while other developed economies are close to recession. This has been one of the reasons for the FED being more hawkish than other major central banks, which has been keeping the USD in demand since summer. Although, we are seeing signs of weakness get stronger, as employment slows and home sales soften. home prices

Home sales hit a 13-year low as mortgage rates rose last month, with an average 30-year fixed-rate mortgage rate exceeding 8% in October, and inventories remained exceptionally low, So, sales fell in October and home prices continued to rise. According to a monthly study released Tuesday by the National Association of Realtors, this kept homebuyers out of the market since they can’t afford such high rates.

Treasury yields remain bearish for a month which is also helping drive the USD down. The greenback is in a perilous position because we have seen some technical breaks in most major pairs right now, indicating a further decline in the currency. And if the decline in bond yields gains traction, it will lay the stage for the USD to continue falling. If today’s dip maintains, it will be the fourth consecutive day that the pair has fallen since the end of July. That speaks something about the dollar’s current lackluster performance.

US Existing Home Sales for October 2023

Existing home sales for October 3.79M annualized versus 3.90M estimate
September home sales were 3.96 million annualize rate revised to 3.95M
Existing home sales for October 3.79M vs 3.90M estimate
Existing home sales -4.1% versus -2.2% last month
Inventory 1.15M which is 3.6 months up from 3.4 months last month
Sales are down -14.6% from a year ago

Regionally:

West -1.4% from September to an annual rate of 690,000. Down 14.8% from a year ago. Prices are up 2.3% from a year ago
South -7.1% from September to an annual rate of 1.69 million. Down 14.6% from a year ago. Prices are up 4.2% from year ago
Northeast -4.0% from September to an annual rate of 480,000. Down 15.8% from a year ago. Prices are up 7.5% on the year
Midwest unchanged from September. Down 13.9% from year ago. Prices are up 4.2% from a year ago
The sales pace was the slowest sales pace since August 2010

Supply is up 1.8% in October but down -5.7% annually
Median sale price of $391,800 up 3.4% year on year. That is an all-time high for October
First-time home buyers were response for 28% of the October sales up from 27% in September and the same as October 2022
All cash sales accounted for 29% of transactions in October unchanged from September but up from 26% in October 2022
Individual investors or second-home buyers purchase 15% of homes in October down from 18% in September and 16% one year ago
Distressed sales – foreclosures and short sales – represented to percent of sales in October unchanged from last month in the previous year
Mortgage rates according to Freddie Mac average 7.44% as of November 16 which is down from 7.5% the previous week but up from 6.61% one year ago. Mortgage rates have declined for 3 consecutive weeks
Single-family homes declined to an annual rate of 3.38 million in October down 4.2% from 3.53 million in September and 14.6% from the previous year. The median home price was $396,100 up 3% from 2022
Multi-family sales came in at 410,000 units down -2.4% from September and -14.6% from one year ago. The median price for a condo came in at 356,000 up 7.6% from the prior year

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.