US: Lower mortgage rates are giving home buying a small boost – Wells Fargo

Data released today showed that existing home sales rose 2.5% in July to an annual rate of 5.42 million above the 5.39 million expected. Analysts at Wells Fargo noted that price appreciation continues to moderate, with the median price up 4.3% year-over-year. 

Key Quotes: 

“Lower mortgage rates appear to be giving home buying a slight boost, but many potential buyers are still being put off by the lack of affordable homes available for sale. Overall home sales rose 2.5% in July to a 5.42 million-unit annual pace, while sales for the prior month were revised slightly higher to a 5.29 million-unit pace. Using the non-seasonally adjusted data, existing home sales through the first seven months of 2019 are running 2.9% below the same period one year ago.”

“The median price of an existing home has risen 4.3% over the past year to $280,800. Prices for single-family homes have risen slightly faster, climbing 4.5% to $284,000, while prices for condos/co-ops have risen 1.9% to $254,300.”

“The lack of affordable product remains a major hurdle in the single-family market too. Total housing inventory at the end of July fell to 1.89 million homes, down 1.6% from 1.92 million units a year ago.”

“The mortgage applications data, released earlier this morning, suggest lower mortgage rates are having a much greater impact on refinancing than on home purchases. Purchase applications fell during the latest week, despite a further drop in mortgage rates, and are up just 5.3% over the past year. Applications to refinance an existing mortgage have jumped 180%.”