In a piece for MarketWatch, Thomas H. Kee Jr., CEO of Stock Traders Daily, explores the dip in pending homes sales in August and if the “housing party” in the U.S. is coming to an end.
Pending home sales fell by 2.5% in August, but mortgage rates are still incredibly low, so why are buyers apprehensive?
Interestingly, in the face of an FOMC meeting that actually had a high probability of resulting in higher rates, mortgage rates fell. Even after the decision, and as the chance of a December hike increases beyond 60%, mortgage rates are falling.
How is this possible? It all comes down to demand, argues Kee. If demand levels are weak, mortgage companies will offer better rates, so the weak demand numbers from August seem to be the reason rates have fallen ahead of and after an FOMC meeting that was centered around prospects for rate hikes.