The Houses Sold. The Buyers Changed.

The 30-year mortgage rate averaged 6.86 percent in September, according to Freddie Mac. That is up from 6.67 percent in August and 6.35 percent a year earlier.

Existing home sales fell 2.2 percent across those twelve months. They still rose 1.5 percent on the month, to an annual rate of 3.99 million.

The National Association of Realtors published that figure on October 13, against forecasts of a small decline. The gain led the coverage.

Lawrence Yun, the association's chief economist, said higher inventory and longer days on market had given buyers better negotiating power.

The key observation is that the headline rose 1.5 percent while the investor share of sales rose five points.

The total moved least.

Existing home sales are recorded at closing. The association also records the buyer behind each closing, and that line moved further than the total did.

Individual investors and second-home buyers were 20 percent of September sales. In August they were 15 percent.

Against a total that rose 1.5 percent, those shares put purchases by everyone else down more than 4 percent.

Both moves sit in the same release. One of them was reported.

The shares come from a survey of agents, not from a separate count. A five-point move in one month is large for that series, and the arithmetic here follows the shares.

All-cash sales were 27 percent, down from 30 percent a year earlier. Whatever is drawing investors in, it is not a broad shift toward buyers who need no loan.

First-time buyers were 31 percent of sales, against 30 percent in August. That line barely moved while the investor line jumped five points.

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This is an investor-occupant inversion.

At 6.86 percent, a financed owner-occupant clears a smaller loan than the same household cleared in August. An investor underwrites the purchase against rent rather than against a paycheck.

The two buyers answer to different arithmetic. When the rate rises, one of them drops out and the other does not.

Yun said further increases in mortgage rates mean fewer buyers can qualify. The sales count has no line for the ones who could not.

Inventory reached 1.60 million homes, up 4.6 percent from a year earlier. Months of supply held at 4.8, against 4.5 last September.

The median time on market was 33 days, up from 31 in August. Houses sat longer in a month when more of them sold.

Condominium sales fell 2.4 percent while single-family sales rose 2 percent. The gain did not reach every part of the market.

The downward slide has begun.

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New home sales. The Census Bureau counts these at contract rather than at closing, which places the reading in the month the decision was made. A rise alongside soft existing sales would put the weakness in timing. A fall would put it in demand. (Source: Census Bureau)

Traffic of prospective buyers. Builders report each month how many shoppers walked through, and a shopper appears long before any closing statement. A rise would show owner-occupants returning at these rates. A fall would show them leaving before the sales count can see it. (Source: National Association of Home Builders)

Rent of primary residence in the consumer price index. Homes bought by investors add to the rental stock when they are let out, and that lands here rather than in a housing release. Slowing rent growth would show the supply arriving. Faster rent growth would show the houses changing owner without changing use. (Source: Bureau of Labor Statistics)

A sale needs one buyer, not a particular one. When the usual one steps back, the count holds for as long as somebody else steps forward.

Talk soon,
The Playbook Daily