Existing Home Sales improve in October

Wells Fargo Research Team Wells Fargo

Summary

Upturn in sales likely to be fleeting

Existing home sales strengthened 3.4% during October, ending a two-month streak of declines. The improvement mostly reflects the decline in mortgage rates that occurred in August and September in anticipation for a reduction in the federal funds rate from the Federal Reserve. The upturn is likely to be short-lived given mortgage rates have legged higher in recent weeks and the bounce in mortgage purchase applications experienced in the late summer has reversed.

As we noted in our Annual Economic outlook published this morning, the housing market will likely encounter some near-term headwinds as buyers grapple with higher-than expected financing costs. What's more, a smaller step down in rates next year means the mortgage rate lock-in effect will persist and keep new inventory relatively scarce.

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Wells Fargo Research Team

Wells Fargo

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