Earlier this morning we saw that
existing home sales fell 3.2% in Octoberto an annualized pace of 5.12 million units.
Lawrence Yun, NAR chief economist, pointed out that sales had fallen in part because of erosion in purchasing power and low inventory that were causing home prices to climb.
Deutsche Bank’s Joseph LaVorgna pointed out that the “quality” of existing inventory also weighed on sales.
But he attributed the fall in existing home sales to rising mortgage rates as well. The 30-year fixed rate stands at 4.35%, according to the latest Freddie Mac survey, but mortgage rates have been running up since May and the 30-year was as high as 4.58% in August.
Finally, NAR and LaVorgna pointed to the impact of the upcoming Qualified Residential Mortgage rules that “will require a lot more time, documentation and scrutiny to process loans,” according to NAR.
“Lenders may be hesitating in order to ensure compliance with the new measures which take effect in January of next year,” said LaVorgna. “In general, lending standards for anything other than prime mortgages remain relatively restrictive.”