Morning Market Brief November 22, 2024

US home sales rebound in October

The National Association of Realtors (NAR) announced that sales of existing homes in the US increased in October. The US real estate market has weakened under tight financial conditions. However, this could be a springboard to more activity, particularly if inventory remains relatively high and demand improves as mortgage rates eventually begin to come down.

• Existing home sales in the US increased by 3.4% in October, the biggest monthly increase since February 2024. Sales of existing homes have dropped in six of the past eight months, highlighting the struggles of the US real estate market.
• NAR also reported that inventory of homes for sale grew over the month. With indicators pointing to the potential for higher demand, real estate market activity could be set to improve, according to the real estate organization.
• In a separate report, the Mortgage Bankers Association of America (MBA) reported that mortgage applications rose by 1.7% over the week ended November 15, which was the second straight increase. This came despite rising mortgage rates.
• MBA also reported that the rate on a 30-year fixed-rate mortgage rose from 6.86% to 6.90% over the same week. Mortgage rates have ticked higher over the past month with expectations growing the US Federal Reserve Board will only gradually reduce interest rates.
• Demand is expected to pick up with mortgage rates expected to eventually come down. Largely in response, US builders’ optimism ticked higher in November. Just before that, however, housing starts and building permits both dropped in October.

Lower supply and demand for housing have both weighed on overall real estate market activity. However, inventory appears to be rising. On the opposite end of the spectrum, a relatively strong labour market and economy could improve consumer confidence and demand for real estate.

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