There has been a lot of movement in markets this week as international politics added a new wild card. A Brexit agreement is on the table for British Parliament to vote on this weekend and that has only complicated the U.S. market picture.

Just a week ago, President Trump announced a phase one trade agreement between the U.S. and China. That was met with market optimism and an uptick in the 10-year Treasury note yield. That typically means rising interest rates. Then, at the beginning of this week, confidence in the deal faded when representatives from China said nothing was signed and the U.S. still needed to make some concessions before the deal can move forward.

Then, the U.K. and the EU came to an agreement on Brexit which prompted another increase in economic confidence, thus pushing investors back into equities, driving up the 10-year Treasury yield.

What does that mean for housing? Well, rates are still well below what they were a year ago but did bump back up this week. Freddie Mac's weekly survey shows a 30-year fixed-rate mortgage average of 3.69%. That's a far cry from the 4.85% we saw this time last year, but also higher than just a week ago. 

Consistent, low mortgage rates have helped homebuilder confidence surge to its highest level in nearly two years and caused a spike in refinance and purchase activity. Ellie Mae reports that refis made up 49% of all loans in September with purchases at 51%. Ellie Mae's data also showed an overall closing rate of 78.1% in Sept. 2019. 

National housing inventory fell by 2.5% in September, according to realtor.com, and the supply of homes priced under $200,000 has dropped by 10% year-over-year. What's even more interesting is that the "move-up" market is also seeing issues, with the inventory of that price range ($200k – $750k) falling stagnant in September with a decline expected on the horizon. The level of housing starts also declined overall in September but single-family starts increased by 0.3%. Building permits, an indicator of future housing starts, decreased by 2.7%. 

Right now, it's estimated the housing market, in general, is undersupplied by about 1 million units. That means, if mortgage rates stay less than 4%, it's likely home price gains will start to climb back up setting up a hyper-competitive spring 2020.