Pending home sales in the US increased by 7.5% month-on-month in October after falling 2.3% in September. Thus, the pending home sales index rose from 116.5 in September to 125.2 in October. On an annual basis, sales fell by 1.4% in October, given the pending home sales index of 127 points in October 2020.
Although mortgage rates are on the rise, October saw a significant monthly increase. The market expectation was for an increase of only 1%. The annual decline, on the other hand, is not interpreted too negatively as it is related to the cyclical peak last year. In addition, as an important detail, the increase in housing prices will continue and demand is therefore pulled forward. Reason; Mortgage rates will rise as rents and housing prices rise, plus the Fed’s now considering tightening. On the one hand, demand will decrease, but on the other hand, there is a housing stock that decreases in a short time due to early demand. If the market is to be congested by high housing prices and reduced demand, construction firms will focus on depleting existing stocks rather than building new homes. Supply shortages have already slowed new productions. Price uncertainty and supply shortage indicate an acceleration for early-term demand and a slowdown for broad-term real demand. Since an important component of high inflation dynamics is prices in the housing market, it is a detail that needs to be evaluated for the Fed.
Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
