New listings up, but pending sales slip in subdued market
Mortgage rates are holding relatively steady around the lowest levels of the year, but buyers still aren’t committing as other economic concerns persist.
Key points:
- The 30-year fixed-rate mortgage, which hasn’t moved much in the past month, remained in the 6.3% range as of Oct. 9.
- While there has been an uptick in new listings, this so far hasn’t led to a spark in buyer activity.
- With the federal government shutdown causing delays in economic data releases, rates remain stable — but uncertainty about jobs and inflation is growing.
While real estate is showing some signs of life, the market remains fairly quiet as the federal government shutdown stretches into a second week.
Mortgage rates have dropped slightly, with the 30-year fixed-rate averaging 6.3% as of Oct. 9, according to Freddie Mac's latest survey. While down slightly from last week's average of 6.34%, 30-year rates have stayed within a narrow range over the past month.
Amid stabilizing rates, sellers appear to be testing the market one more time before the holiday season arrives. New listings rose 2.3% year-over-year during the four weeks ending Oct. 5 — the biggest increase in three months, according to Redfin data.
Market conditions aren't impressing buyers
Even with fairly steady mortgage rates, buyers don't seem to be responding. Overall mortgage applications decreased 4.7% for the week ending Oct. 3 compared with one week prior, and purchase applications fell 1% during the same period, according to the Mortgage Bankers Association.
Buyers who are in the market are "throwing spaghetti at the wall to see what sticks" in terms of offers, said Jesse Landin, a Redfin Premier agent in San Antonio who noted that sellers "who want to make it stick, will."
In Redfin's Oct. 9 report, Landin cited one example of a seller who "was getting desperate" after her home spent over 100 days on the market. "She sold for $15,000 under asking price and included the furniture and outdoor amenities like the barbecue and fire pit."
Government shutdown remains a factor
The government shutdown is one variable that has kept mortgage rates — and buyers — subdued.
While the Federal Reserve continues to operate, key government economic reports are being delayed. This lack of new data will make it difficult for the central bank to decide what to do about short-term interest rates during its meeting later this month.
"For prospective homebuyers, the current holding pattern in rates offers stability, but broader uncertainty may weigh on consumer sentiment," Realtor.com Senior Economist Anthony Smith said in an email.
This holding pattern is showing up in other data. The typical home is taking 48 days to go under contract, according to Redfin — a week longer than a year ago. In the four weeks ending Oct. 5, pending sales were down 1.3% year-over-year, the biggest drop in five months. Even with the recent uptick in new listings, inventory remains fairly stable as other sellers pull homes off the market.
Insurance lapse delaying sales in flood-prone areas
Perhaps the biggest impact of the government shutdown on the housing market has been the inability for some to secure flood insurance. With the National Flood Insurance Program (NFIP) on pause, the National Association of Realtors estimates about 1,400 property transactions a day are being delayed.
"These are not canceled sales, they're just delayed until the flood coverage can be reinstated," Nadia Evangelou, a senior economist at NAR, told The New York Times. "But of course, these delays still have some real effects."