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Higher rates flip the homebuilders’ fortunes (again)

New home sales only beat estimates because of lower rates

While the homebuilders weren’t surprised by the better-than-estimated new home sales report released Friday, some people were a bit shocked. But the forward-looking purchase application data was getting better from Nov. 9 up until the early part of February as mortgage rates fell from 7.37% to 5.99%. Now, of course, that has all changed quickly.

On CNBC Friday morning, I highlighted that whatever data stabilization we had at 5.99%, it’s now gone in the blink of an eye.

The homebuilders are crafty people (pun intended). They move homes like they are commodities, not as a secured form of shelter they live in. They don’t ever have to have the conversation about how low their total payment is in the new home they’re buying, unlike some of their buyers (which explains higher cancellation rates).

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Lower mortgage rates attracting more homebuyers 

An often misguided premise I see on social media is that lower mortgage rates are doing nothing for housing demand. That’s ok — very few people are looking at the data without an agenda. However, the point of this tracker is to show you evidence that lower rates have already changed housing data. So, let’s […]

3d rendering of a row of luxury townhouses along a street

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