Pending Home Sales Hit All-Time Low as Fed Eyes More Hikes — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Pending home sales hit an all-time low in records dating to 2001, sliding 7.3% in September and falling 11.3% year-over-year, far worse than the 0.4% decline Wall Street expected.
- Housing starts fell 5.2% in September against expectations for just a 0.4% drop, while building permits slipped 0.2% versus a projected 2% gain, per Commerce Department data.
- Single-family permits totaled 845,000, down 4% from August and the lowest reading since 2023.
- The 30-year mortgage rate ended September around 7.6%, up from roughly 3% five years ago, and any further Fed hikes could push it higher from the current 7.43%.
- Goldman Sachs forecasts residential investment to decline 2.5%, 4%, and 1% across the next three quarters, with 2027 existing home sales projected at 3.9 million—26% below pre-Covid 2019 levels—citing a "lock-in" effect holding 95% of borrowers at sub-prevailing rates.
- Futures markets imply a strong chance of a quarter-point Fed hike in December and another in March 2027, even as traders expect rates held steady at next week's meeting.
- NAR chief economist Lawrence Yun said mortgage rates may be topping out since they've already risen far more than the Fed's short-term hikes, while home builder sentiment sits at 14-year lows.
Why it matters: Goldman projects residential investment will decline for three straight quarters, with existing home sales stuck 26% below 2019 levels. The lock-in effect—95% of borrowers sitting on sub-prevailing rates—means the Fed's December decision now directly determines whether the housing freeze deepens or merely lingers into 2027.
Ask SkimNews
