Mortgage Rates Affected By Sales Of Existing Homes
September sales of existing homes fell by double the forecast. These sales are measured by closings of contracts written in the months before, and the mortgage crunch did not bite until mid-August. You should assume that October will underperform its forecast, also; September was the worst contract-writing month since that one in 2001. However, perverse good news: At street level it is clear that psychological damage is worse than actual loan-denial. New-home sales are based on contracts-written, not closed, and the cancellation rate is running 30-50 percent. Builders are not “clearing inventory”; they are still building it and then dumping it at market-wrecking discounts — more than 10 percent of the gross revenue for some. Nothing would help housing more than the failure/merger/mothball of as many national builders as possible.