Rates Rise, US New-Home Sales Fall 10% to 10-Month Low

Rates Rise, US New-Home Sales Fall 10% to 10-Month Low

Rates Rise, US New-Home Sales Fall 10% to 10-Month Low

$DIA, $SPY, $QQQ, $VXX

Purchases of new US homes fell in December to a 10-month low, suggesting the post-Election rise in mortgage rates pushed out potential buyers.

Single-family house sales dropped 10.4%, the most in nearly 2 years, to a 536,000 annualized pace, the US Commerce Department data showed Thursday.

The analysts consensus survey was for 588,000.

The numbers indicate that the increase in mortgage rates curbed momentum in the housing market after steady job gains and historically low borrowing costs helped push full-year sales to the highest since Y 2007.

Stricter lending standards are a hurdle for buyers too.

The average interest rate on a 30-year fixed mortgage reached 4.32% at the end of December, the highest since April 2014, according to Freddie Mac figures. That was up from 3.54% just before the November 8th election. It was 4.09% in the week ended 19 January.

The supply of homes for sale increased to 5.8 months, the highest since September 2015, from 5 months in November. There were 259,000 new houses on the market at the end of December, the most since Y 2009.

Economists’ estimates for the December sales rate ranged from 550,000 to 625,000. The Commerce Department revised the November reading to a 598,000 pace from a previously estimated 592,000.

Optimism about President Donald Trump’s plans to spur economic growth through tax cuts and looser regulation triggered a rise in Treasury yields and a corresponding increase in mortgage rates. The Fed is also projected to raise its benchmark interest rate again this year.

The median sales price of a new house increased 7.9% from December 2015 to $322,500, Thursday’s report revealed.

New-home sales, which account for about 10% of the residential market, are tabulated when contracts are signed. That makes them a timelier barometer than transactions on existing homes.

Sales of previously-owned homes declined in December while closing the strongest year since Y 2006, National Association of Realtors data showed Tuesday. Contract closings, which reflect signings made a month or two earlier, fell 2.8% to a 5.49-M annual rate, as inventory declined to the lowest since Y 1999.

Thursday, the US major stock market indexes finished at: DJIA +32.40 at 20101.04, NAS Comp -1.16 at 5655.17, S&P 500 1.69 at 2296.68

Volume: Trade on the NYSE came in at 959-M/shares exchanged.

  • Russell 2000 +1.4% YTD
  • DJIA +1.7% YTD
  • S&P 500 +2.6% YTD
  • NAS Comp +5.1% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.40) Neutral (0.10) Very Bullish (0.52) Very Bullish (0.58)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.12) Bullish (0.42) Bullish (0.38)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.47) Neutral (0.23) Very Bullish (0.67) Very Bullish (0.53)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.44) Bearish (-0.42) Very Bearish (-0.74) Neutral (-0.15)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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