The week of Nov. 9-13 answered the question the previous week left open: how badly did October’s jump in mortgage rates hurt the housing market? The answer, from closings, prices and household balance sheets, was badly. At the same time, a hot inflation report made a December rate hike look more likely and possibly larger, even as weekly mortgage rates kept drifting down.
Inflation keeps a December hike on the table
The week’s pivotal release came Nov. 10. The Bureau of Labor Statistics said the consumer price index rose 0.4% in October, with core prices up 0.3% for a third straight month and shelter accounting for more than 30% of the monthly gain. Hours earlier, Fed Governor Christopher Waller had said in a speech in London that if core inflation came in around 0.3% or higher, “a 50 basis point hike in the policy rate should be considered at the December meeting.” Core landed exactly there, as our CPI coverage detailed.
That changes the conversation from a week earlier, when the 165,000-job October payroll report had kept a December increase under discussion. The Federal Open Market Committee held at 3.75% to 4% on Oct. 28 with two dissents for a hike, and it meets next on Dec. 8-9.
On Nov. 13, the BLS producer price index rose 0.3% for October and 6.5% from a year earlier. The National Association of Home Builders said in its analysis that prices of inputs to residential construction were up 10.4% year over year, even with energy costs down 3.3% on the month.
October’s rate shock shows up in sales and prices
The National Association of Realtors reported Nov. 12 that existing-home sales fell 5.5% in October to a 3.75 million annual pace, the slowest since August 2010. Inventory rose to 1.59 million homes, a 5.1-month supply, and the median price was $416,700, up just 0.4% from a year earlier. NAR’s Lawrence Yun tied the decline to rates at their highest since 2000 apart from a single month in 2023. Our full breakdown has the regional detail, including a 14.5% annual drop in the West.
Redfin’s data pointed the same way. Its median sale price fell 0.4% from a year earlier in October, to $388,634, the first annual decline since May 2023, according to the company. Two days later, Redfin said only three of the 50 largest metros were seller’s markets, all in the suburbs of New York and Philadelphia, with sellers outnumbering buyers nationally by 70.5%.
Freddie Mac’s weekly survey on Nov. 12 put the 30-year fixed rate at 7.11%, the fourth straight weekly decline and the lowest in seven weeks, down from 7.18% the week before and a 7.40% peak in mid-October. As our rate coverage noted, that relief is modest, and it is running against the Fed’s likely direction.
Owners borrow against equity; builders face tight credit
The New York Fed’s quarterly household debt report on Nov. 10 showed home equity line of credit balances up $23 billion in the third quarter, the largest increase since 2005, as total household debt reached $19.1 trillion. On our reading, that fits owners with low first-mortgage rates tapping equity rather than refinancing. Our report covers the delinquency trends.
Builders got little help. NAHB said Nov. 13 that credit for land acquisition, development and construction tightened for a 19th straight quarter. Opening a housing conference the same day, Boston Fed President Susan Collins said tighter policy “can limit the expansion of the housing stock needed to ease housing market pressures,” while defending it as necessary for price stability.
The week also brought tragedy in New York. On Nov. 11, a Flatbush Avenue building in Brooklyn collapsed into an excavation pit next door, killing eight people; city officials have not said what caused it. Our story has the details.
What changed
A week ago, the open question was whether October’s 7%-plus rates would show up in the data. They did: closed sales at a 16-year low, a first annual price dip in Redfin’s series, and sellers outnumbering buyers by a record margin. What did not change is the pressure on the Fed. With core inflation at 0.3% again, the December debate has moved from whether to hike to how much. Next week’s builder sentiment, housing starts and pending sales reports will show whether the damage carried into November.
