Existing Home Sales in Oct totaled 4.97mm annualized, 170k more than expected, up from 4.90mm in Sept but vs 5.06mm in Aug. The increase in Oct was led by single family homes as condos/co-cop sales were unchanged. Combined with the reduction in the absolute number of homes for sale, months supply fell to 8.0 from 8.3, the lowest since Jan. Holding back even more sales, contract failures totaled 33% of signings up from 18% in Sept and 8% one yr ago. The NAR defines contract failures as “cancellations caused by declined mortgage apps, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.” They also saw cancellations due to “disruption in the Nat’l Flood Insurance Program, and lower loan limits for conventional mortgages.” The median home price fell 4.7% y/o/y to $162,500 and distressed sales made up 28% of all sales vs 30% in Sept and 34% one year ago. Bottom line, as seen, the decision to both buy and actually close a purchase of a home is much more than where financing rates are and evidence that as much as the government wants to continue to prop up this vital sector, the true supply/demand dynamic will ultimately prevail in creating stabilization.
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