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Pamela Gordon

Loan Officer
Movement Mortgage
NMLS ID # 120116

New home sales stay hot as prices soar

By: Movement Staff
October 30, 2020

Mortgage origination volume is expected to hit a whopping $4 trillion for the first time ever. The historically low-interest-rate environment has caused a boon in refinances and purchases, pushing Fannie Mae's economists to up their predictions for 2020. While refinances are leading the way currently, the purchase market is still hot, at least, when people can find a home to buy.

The Census Bureau reported this week that new home sales went up a staggering 32.1% year-over-year and 16.9% year to date. The median sales price for a home sold in September of this year came in at $326,800 with the average sales price at an eye-popping $405,400. 

Those prices were expected as low inventory has made for fierce competition between buyers. The latest S&P CoreLogic Case-Shiller home price index, measuring 19 cities in the United States, shows a 5.7% increase in August year-over-year. Many economists feel that this upward pressure in pricing will continue for some time as inventory remains low. 

While new home sales are hitting a stride, pending home sales fell by 2.2% in September. That's the first time in months we've seen a drop in that data point monthly. Annually, pending home sales are up 20.5% in the month of September. 

Refinances remain popular because of interest rates that remain at historically low levels. This week's Freddie Mac average on a 30-year fixed-rate mortgage came in at 2.81%.  

Wall Street stumbles as tech underwhelms

Tech stocks were the big disappointment on Wall Street this week as corporate earnings reports failed to impress investors. The notable FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) were fairly lackluster with Apple reporting a 16% drop in iPhone sales and 21% dip in iPhone revenue. Amazon lost about 1.87% even though the company crushed Q3 sales. Google was the lone bright-ish spot with Alphabet, Google's parent company, reporting a 7% gain.

That pulled Thursday's gains back down to Earth with Friday's futures down for all three major indices. Thursday was initially seeing markets claw back after suffering their worst sell-off in months. As we quickly approach Tuesday's Presidential election, the assumption is no stimulus deal will be done until after. Combined with the continued spread of COVID-19, investors got a little spooked. The Dow Jones Industrial Average dropped 964 points, or 3.4%, on Wednesday, its worst lost since June. The S&P 500 also suffered its worst loss since June, falling by 3.5%. The Nasdaq suffered a worse performance, losing 3.7% of its value, its worst session since the tech sell-offs in September. 

Of Note:
  • Fannie Mae and Freddie Mac reported a combined net profit of $6.69 billion in Q3.
  • Q3 GDP increased by 33.1%, the biggest post-WWII increase since we hit a 16.7% increase in 1950, according to the Commerce Department.
  • The Labor Department's unemployment report was better-than-expected with jobless claims falling to 751,000. 
  • Continuing claims also dropped again and now sit at 7.75 million total.
Author: Movement Staff

The Market Update is a weekly commentary compiled by a group of Movement Mortgage capital markets analysts with decades of combined expertise in the financial field. Movement's staff helps take complicated economic topics and turn them into a useful, easy to understand analysis to help you make the best decisions for your financial future.

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Pamela Gordon
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1520 Cooper Point Rd SW, Ste 350, Olympia, WA 98502
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NMLS # 120116

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