Higher Mortgage Rates Since Election Impacts November Pending Home Sales

Yesterday U.S. stock indexes declined after the National Association of Realtors reported that pending home sales in November fell to their lowest level in nearly a year as the recent uptick in interest rates and not enough inventory discouraged some potential buyers.

The pending home sale index declined -2.5 percent in November to 107.3 and remains at the lowest level since January (105.4).

Mortgage rates have been climbing higher since Trump won the U.S. presidency as bond prices fall and the yield on the 10 yr. Treasury moves higher.

The yield on the U.S. 10 yr. Treasury was 1.82 percent the day before the U.S. presidential election on November 7th but climbed to 2.44 percent by December 1st.

After the Federal Reserve raised interest rates with the federal funds on December 15th for the second time in a decade, the yield on the 10 yr. Treasury climbed to 2.6 percent before pulling back.

Higher yields on the 10 yr. Treasury ultimately impacts mortgage and loan rates with cars and credit cards.

NAR chief economist Lawrence Yun said the ongoing supply shortages and the jump in mortgage rates following the election impacted pending sales in November.

“The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election,” Yun said in a released statement.

“Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract” Yun added.

Written By:

John Schweitzer



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