As mortgage interest rates edged up in September, the number of signed contracts for home purchases unexpectedly dipped 2.3 percent from August, the National Association of Realtors (NAR) reported, and fell 8 percent from the number a year earlier.
Mortgage interest rates remained below 3 percent from July through early September, but rose to an average of 3.15 percent at month’s end, the NAR said.
Pending sales in the Northeast slipped 3.2 percent in September from August and 18.5 percent year on year. Midwest sales were off 3.5 percent in September and 5.8 percent from a year before.
In the South, September sales were 1.8 percent below August’s and 5.8 percent compared to the preceding 12 months, while sales in the West were down 1.4 percent and 7.2 percent, respectively.
TREND FORECAST: As we noted in “Demand for Homes Cools Amid Record Prices” (17 Aug 2021), the housing frenzy is slowly losing energy: most of the best properties in the hottest markets have been bought, and more prospective buyers will wait for prices to come down because they cannot afford homes at the current market price. 
TREND FORECAST: We maintain our forecast that home prices will moderate somewhat in the short term and the current U.S. housing shortage will remain in place.
A 2007-style housing crash remains unlikely, not only because of the ongoing home shortage but also because, this time, lenders have been much more selective about who they loaned mortgage money to and there are no Bankster subprime loan scams as there were back in the early 2000s.
We also maintain our forecast that when the U.S. Federal Reserve turns off the cheap money spigot, exits the mortgage bond market, and raises interest rates, the U.S. housing market will decline.
As we predicted in “Homeowners Trapped in Place by High Prices” (8 Jun 2021), when there is a strong indication the Fed will raise baseline interest rates soon, buyers will storm the market with applications to try to beat the rise. That final surge, when the Fed rate hits 1.5 percent, will signal the end of the housing boom.

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