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The high points for economic data in the May 20 week should be the sales numbers for new and existing homes for April. Gauging the health of the housing market may be a bit tricky in reading these reports. Seasonal adjustment factors for this time of year anticipate a busier sales period as potential homebuyers shake off winter and start planning moves based on changing household needs.<\/p>\n\n\n\n
However, the housing market got a chill earlier this year when mortgage rates began to rise again and home prices did not ease up despite some slackening in the market. The Freddie Mac weekly report shows mortgage rates for a 30-year fixed rate note trending higher from 6.64 percent in the February 8 week to 6.88 percent in the March 7 week and then up to 6.82 percent in the in the April 4 week. Rates reached 7.10 percent in the April 18 week and have remained above 7 percent since then. Rates near the 7 percent-mark seem to be a point where potential buyers decide to wait for better rates, or, if waiting isn\u2019t an option, to borrow with an adjustable rate. In any case, rates remain at levels not seen since before the Great Recession. The current generation of buyers entering the housing market is taking time to adapt to the reality that mortgage rates under 6 percent are not coming back any time soon. Buyers are and will remain rate sensitive in taking out a mortgage and are looking for any dips to lock in lower borrowing costs when they can.<\/p>\n\n\n\n
The NAR report on sales of existing homes in April at 10:00 ET on Wednesday is for purchase contracts signed in February and March. As such, the buyers in these months had a lower rate which may have encouraged them to commit to a purchase with the prospect of rates going up. However, sales could have been restrained by a lack of supply. Those who currently hold mortgages with favorable rates \u2013 especially those taken out in 2019-2021 when rates were particularly low \u2013 are unlikely to put their home on the market absent a pressing reason. Competition is fierce for the more sought-after units.<\/p>\n\n\n\n
The government report on sales of new single-family homes in April at 10:00 ET on Thursday is for contracts signed in that month. As such, the uptick in mortgage rates is expected to limit the number of sales as buyers for new construction could be willing to delay buying until a more favorable rate becomes available.<\/p>\n\n\n\n