Pocket Listings Distort Housing Inventory
The number of homes listed for sale nationally is finally beginning to rise, but ask anyone looking to buy a home and the majority will complain there is nothing out there. Neighborhood to neighborhood, market to market, supply still seems tight, despite a 6.5 percent increase in listings from a year ago, according to the National Association of Realtors.
“Statistically it appears that we are getting back to very balanced market conditions,” said Lawrence Yun, chief economist for the Realtors. “However, the sentiment out there is that we still have a shortage of inventory, and I think that is due to the prevalence of pocket listings in some markets.”
A so-called pocket listing is when the real estate agent signs a listing agreement with a seller but does not advertise it widely or put it in a multiple listing service, where other agents and buyers can see it. Instead, they circulate the listing only among their own buyer clients or within their own brokerage. That way they can potentially get commissions on both buyer and seller sides, and would not have to split commissions with other selling agents.
No hard numbers exist on pocket listings so their rise and fall comes anecdotally from Realtors. Pocket listings are not illegal.
The incentive for a seller to do a pocket listing could be that they need to sell the home quickly and don’t want to go through a wide marketing plan with multiple showings and open houses. The agent is promising the seller that they know of enough potential buyers personally that they can get a deal done fast. This usually happens when the market is very tight, and buyers are willing to make larger offers up front to negate the risk of a bidding war.
Read More –> Existing homes sales jump for third straight month
Mortgage backed securities (MBS) gained just +4 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move sideways. We saw our best rates on Wednesday and our worst rates on Thursday.
This was the second straight week of sideways movement in pricing as the week before last saw a net change of only +2 BPS.
This is due to the bond market seeing terrific support due to fear and uncertainty over Ukraine and Israel but not enough “new” escalation to drive up long bond pricing.
On the domestic front, we had some economic data that (under normal circurmstances) would usually pressure MBS pricing with better than expected readings for Durable Goods Orders, Existing Home Sales, Philly Fed Manufacturing and Richmond Fed Manufacturing. We also had an Initial Weekly Jobless Claims reading below 300K.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Forecast||Prior|
|28-Jul||10:00 AM||Pending Home Sales||–||-0.80%||6.10%|
|29-Jul||9:00 AM||Case-Shiller 20-city Index||–||10.00%||10.80%|
|29-Jul||10:00 AM||Consumer Confidence||–||85.6||85.2|
|30-Jul||7:00 AM||MBA Mortgage Index||–||NA||2.40%|
|30-Jul||8:15 AM||ADP Employment Change||–||215K||281K|
|30-Jul||8:30 AM||Chain Deflator-Adv.||–||NA||1.30%|
|30-Jul||8:30 AM||Chain Deflator-Adv.||–||2.10%||1.30%|
|30-Jul||10:30 AM||Crude Inventories||–||NA||-3.969M|
|30-Jul||2:00 PM||FOMC Rate Decision||–||0.25%||0.25%|
|31-Jul||7:30 AM||Challenger Job Cuts||–||NA||-20.20%|
|31-Jul||8:30 AM||Initial Claims||–||310K||284K|
|31-Jul||8:30 AM||Continuing Claims||–||2525K||2500K|
|31-Jul||8:30 AM||Employment Cost Index||–||0.40%||0.30%|
|31-Jul||9:45 AM||Chicago PMI||–||61.8||62.6|
|31-Jul||10:30 AM||Natural Gas Inventories||–||NA||90 bcf|
|1-Aug||8:30 AM||Nonfarm Payrolls||–||220K||288K|
|1-Aug||8:30 AM||Nonfarm Private Payrolls||–||225K||262K|
|1-Aug||8:30 AM||Unemployment Rate||–||6.10%||6.10%|
|1-Aug||8:30 AM||Hourly Earnings||–||0.20%||0.20%|
|1-Aug||8:30 AM||Average Workweek||–||34.5||34.5|
|1-Aug||8:30 AM||Personal Income||–||0.40%||0.40%|
|1-Aug||8:30 AM||Personal Spending||–||0.40%||0.20%|
|1-Aug||8:30 AM||PCE Prices – Core||–||0.20%||0.20%|
|1-Aug||9:55 AM||Michigan Sentiment – Final||–||82||81.3|
|1-Aug||10:00 AM||ISM Index||–||55.9||55.3|
|1-Aug||10:00 AM||Construction Spending||–||0.30%||0.10%|
|1-Aug||2:00 PM||Auto Sales||–||NA||5.9M|
|1-Aug||2:00 PM||Truck Sales||–||NA||7.5M|
The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.