A massive 25.4% jump in new home sales in October sent a message that the headwind caused by rising mortgage rates was transitory, following a few months of slower sales related to more costly borrowing terms.
The question now is if the 444,000 annualized sales rate in October was a sign that the housing market can power through higher rates, or whether the jump to 4.51% from 4.32% for a conforming fixed-rate 30 year mortgage caused buyers to pause.
"November's new home sales figures will be a barometer of how well the housing recovery is doing in the face of higher mortgage rates," says the economics team at Capital Economics.
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The median Wall Street estimate (meaning half are higher and half are lower) for November new homes sales is 448,000, a 4,000 increase from the prior month. However, Capital Economics expects sales to dip 0.9% to 440,000.
Capital Economics says they will be closely watching to see if there were any "revisions" to October's massive percentage gain in sales, as large monthly changes are often revised lower in subsequent data releases.
"The crucial point," Capital Economics says, "will be whether any downward revision this time around will be large enough to change the impression that sales have come through the rise in mortgage rates relatively unscathed."
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