Existing home sales increase in September, but still way off last years data

National Association of Realtors announced that existing-home sales jumped 10.0 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August. They still remain almost 20% percent below the 5.60 million-unit pace in September 2009 in advance of the expiration of the tax credit last November.

Much of this can be attributed to the lowering of the long term mortgage rate which is a direct consequence of the lowering of the mortgage rate caused by Quantitative Easing.  As you might remember, QE is the Fed's decision to keep the balance sheet expanded even as the mortgage assets were running off.  This had the affect of flattening the yield curve and lowering long term rates as the Fed went on a long-term Treasury spending spree.  This lowered yields on long term debt and consequently mortgage debt.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35% in September from 4.43 percent in August; the rate was 5.21% in April 2010 just after the program had been announced in late March.

30 year US Treasuries


NAR Existing Homes Release for September
Freddie Mac rates year to date
Fed Begins Quantitative Easing by buying over 1 trillion of treasuries March 2010


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