US home sales readings conflict as mortgage rates climb again

Home sales in September rose for the first time since May, with buyers taking advantage of a plateau in mortgage rates over the summer before the surge in rates in recent weeks, The Wall Street Journal reported¹. It put the increase at 1.5% over the previous month and said sales activity overall remained subdued¹.

Semafor reported the opposite direction on the same subject, saying US house sales have dropped to 12 year lows as borrowing costs spike³. It attributed the move to increasing energy prices and higher-for-longer inflation expectations, which it said have sent mortgage rates to recent records³. The two accounts do not identify the same series in their excerpts, and neither reconciles its figure with the other^1,3.

Why it matters to investors

Whatever September showed, the rate backdrop has worsened since. TheStreet reported mortgage rates near 7.5%, and said Treasury Secretary Scott Bessent defended his bond buybacks as a fix for the bond market⁴. That defence is the Treasury’s own characterisation of its policy rather than an independent assessment of whether the buybacks are working⁴.

Positioning suggests investors are not expecting a recovery. Prediction markets are wary of a housing sector recovery, with a contract on existing home sales reaching the threshold consistent with 4 million seasonally adjusted annualised units trading at just $0.41, according to Interactive Brokers².

The gap between the two sales accounts is itself the information here: this coverage does not settle whether September was the first monthly gain since May or the weakest month in twelve years^1,3.

What to watch

Fresh existing-home sales data was due immediately after these reports, alongside the Treasury budget statement, and the dollar fell early on Tuesday ahead of both⁵. That release is the direct test of which of the two sales accounts describes the market, and of whether the prediction market’s scepticism is vindicated^2,5.

The second thing to watch is the path of mortgage rates themselves, since the Journal’s explanation for the September gain was a summer plateau that has since given way to a surge¹. If the rate surge continues, the subdued activity the Journal describes becomes the base case rather than the exception^1,3.

For context on the wider rate picture, the same market report noted that the next European Central Bank meeting is scheduled for Oct. 29, with sterling trading at 1.3243 against the dollar after 1.3205 at the prior close⁵.