Still Feels a Little Zombie-Like

Halloween is over, but the housing and mortgage markets feel like they're still trundling along like wanderlust zombies.

We say that because everything feels sort of listless, if not lifeless. Much of the new market data support our contention.

The data on pending home sales, for one, show contract signings fell 5.6% to a 101.6 index reading. This means the index is back to where it was in December 2012. In a way, we've wandered back to where we started. More important, the index is basically saying we should expect flat home sales for the fourth quarter, which will likely persist into the first quarter of 2014.

Home prices are also feeling listless, though you could be forgiven for thinking otherwise. The S&P/Case-Shiller Home Price Index shows prices rose 0.9% for its 20-city index in August. Year over year, the index is up 12.3%. Keep in mind, though, the Case-Shiller data are two-months in arrears. More contemporary data point to slower price appreciation.

The economy also continues to feel moribund. Retail sales have gone nowhere over the past few months. In fact, r etail sales slipped 0.1% in September. Sluggish retail sales are reflective of sluggish economic growth and cooling consumer confidence.

Consumer price inflation is equally lifeless. The Consumer Price Index dropped to 1.7% on an annualized rate, which means consumer-price inflation is increasing only 1.7% a year. The Federal Reserve's goal is for consumer prices to rise 2% to 2.5% annually. To be sure, most of us dislike the idea of paying more for goods and services, but rising consumer-price inflation is indicative of rising consumer demand and rising economic growth.

A zombie-like economy and zombie-like consumer price growth are key factors in falling mortgage rates, which fell again this past week.'s weekly survey put the average rate of the conforming 30-year fixed-rate loan at 4.27%. Freddie Mac's survey put it even lower, at 4.13%. Of course, mortgage markets are like housing markets in that prices are formed in local markets, but we get the point – rates in most markets are moving lower.

When we gaze into our crystal ball, we don't see much impetus for housing activity to accelerate or for mortgage rates to move higher through the remainder of 2013.

Courtesy of Jessica Regan.

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