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- 🧈 Pending Sales Down Again
In today's issue:
Pending sales are down (again,) but there might be light at the end of the tunnel.
Luxury homes are having a particularly bad time right now, if Redfin's new data is anything to go on.
US weekly jobless claims are here.
Rates continue to tick upwards, but not drastically.
🔖 In case you missed it: The Fed's "housing correction" has become the second worst since WWII, according to Fortune.
Pending Sales Down (again)
butterknife here, with some not-so-good news for you this morning (look, we've got to keep you up to date, even if it means being the bearer of bad news.)
NAR (or the National Association of Realtors, if you want to be all fancy) posted yet another decline in pending sales yesterday, marking the sixth consecutive month in the red.
To be exact, NAR's preferred metric slid 4.0% in November, which adds up to a total year-over-year decrease of 37.8%. Ouch!
There is a silver lining, though. To quote NAR Chief Economist Lawrence Yun:
"There are approximately two months of lag time between mortgage rates and home sales. With mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth"
In other words, as long as mortgage interest rates stay put, we should see pending sales start to recover in the spring.
HousingWire Lead Analyst Logan Mohtashami shares the optimism, pointing out that pending home sales also lag behind the MBA's weekly purchase applications index, which has been on the upswing (as reported in yesterday's edition of this newsletter.)
So watch out for another pending sales drop in December and January, but a possible recovery in February's NAR release.
❓Did you know: The Goonies house has found a home -- a fan of the 1985 Steven Spielberg movie is expected to close on the purchase in mid-January, according to The Oregonian.
We Need to Get Fancier
We're not sure what qualifies as a "luxury home" (private bowling alley, perhaps?), but Redfin is reporting that homes with a market value in the top 5% have managed to take an even bigger hit compared to the broader housing slowdown, with pending sales dropping 38.1% hit over the last quarter.
The decline was led by the generally more expensive coasts (east and west), and probably has something to do with the absolute beating that the stock market took this year, which had an outsized impact on the liquidity of high net-worth buyers.
If you want to read their entire report, you can find it here.
🤡 Fun Fact: Speaking of movie houses, the McCallister family home (featured in 1990's Christmas classic Home Alone) was bookable for one night only back in 2021 -- it's yet to be announced whether potential guests will get another shot this holiday season.
US Weekly Jobless Claims go Higher
New unemployment claims ticked higher this week, though they remain near historic lows.
Jerome Powell, chair of the Federal Reserve, has stated in no uncertain terms that the US central bank sees no weakness in the labor market, and until they do, they will continue to pursue a restrictive economic policy to drive down inflation.
All Eyes on Rates 👀
Rates ticked up yet again today, though the damage was pretty slight considering some of the epic spikes we've seen throughout the year.
Mortgage News Daily reported an average 30-year fixed rate of 6.54% at market close yesterday, a 0.04% increase from yesterday.
For other products, check out their full rate survey here.
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Until tomorrow,
the butterknife team.