Treasury yields were starting to make a slight recovery yesterday. However, on the mortgage side, rates are still going back and forth. By this week, the 30-year fixed mortgage went down a single basis point to 2.86% and the 15-year fixed rate mortgage dropped two basis points to 2.29%.
New home sales data for June shocked everyone, falling 6.6% instead of increasing (up to) 3.5% as experts had predicted. This marks the third month in a row of falling new home sales. Also unusual is June’s months of supply (i.e. how many months until inventory is depleted if housing sales continue at their current rate). While 4 to 6 months supply is normal, June saw an increase from 5.5 months to 6.3 months. This indicates more people may be getting priced out of the market as a result of labor shortages, rising material costs, and an overall lack of houses. What could help matters is the drop in sales from foreign investors, which fell 31% between April 2020 to March 2021. In sales dollars, investment from China, Canada and Mexico dropped more than 50% with only UK investment seeing an increase. However, with visas now more procurable under the Biden administration and with COVID being less of a risk, investors may soon come back with a vengeance. Plus, they may pose a significant threat; the same data shows that 39% of international transactions were all cash, a major draw for sellers. Markets with the most foreign investment (in descending order) are Florida, California, Texas, Arizona, and New Jersey and New York.