Home buyers typically don't make too many big moves in the month leading up to the presidential election, given uncertainty how the results might affect mortgage rates, inflation, and home prices. Yet, Redfin reports, pending homes sales did not drop off significantly from last year.
Pending home sales increased 4.3% year-over-year during the four weeks ending November 3, in line with the increases Redfin reported over the last six weeks. Typically sales see a significant drop before a U.S. election, but they were so low around the same time last year due to rates above 8% that it evened out.
“The fact that pending sales held up in the final run-up to Tuesday’s presidential election is somewhat surprising, especially considering that this year’s election season was highly uncertain and anxiety-inducing,” Redfin analysts wrote in their report.
This latest release follows a 3.2% YOY rise in pending home sales the four weeks ending Oct. 13. Mortgage rates went on to teeter around 7%, pushing the typical monthly mortgage payment close to its highest level since July over the past few weeks. As if in tandem, the number of people applying for a mortgage fell for the sixth consecutive week November 1, as the Mortgage Bankers Association’s (MBA) Market Composite Index decreased by 10.8%.
“Buyers have been jittery the last few weeks because of the election. Most of the buyers I’m meeting are looking at a house or two, then telling me they’ll be back in the new year,” commented Corey Stambaugh, a Redfin Premier agent in Charlotte. “Some buyers are also bummed out by high mortgage rates, but they tend to understand that rates will change in the future and they’ll probably be able to refinance. Plus, most buyers are used to rates in the 6% to 7% range, and they’ve adjusted their budgets and expectations accordingly.”
The Federal Reserve Open Market Committee’s next interest decision is expected to be announced this afternoon during its 2:30 p.m. meeting. Although interest rates don't directly impact mortgage rates, some market observers anticipate a rate cut by the Fed to boost equity-based lending volume.
