There was good news on the economic landscape for this year’s holiday season. Retail sales on the day after Thanksgiving increased 3.4% year-over-year with more money expected to have been spent on Cyber Monday.
The holiday shopping season officially started with the U.S. retail sales climbing 3.4% year-over-year on Black Friday, according to Mastercard Spending Pulse.
The Consumer Confidence Index which measures the level of optimism, also increased for the second straight month in November.
In the housing market, conforming loan limits were raised for 2025 and mortgage rates continued to recover after reaching their recent peak in early November, according to a recent report from the California Association of Realtors (CAR). And while new home sales dropped to their lowest level in October, said CAR, a separate housing market index released recently saw improvement in buyers’ traffic and future sales in November.
In addition, the Federal Housing Financing Agency (FHFA) raised the conforming loan limits for conventional loans for 2025, the report also noted.
To keep up with higher home prices, the maximum baseline for one-unit properties will increase 5.2% from $766,550 in 2024 to $806,500 in 2025. For high-cost states like California and New York, higher loan limits will also be adjusted with the new ceiling being raised to $1,209,750 next year from $1,149,825 this year.
Since conforming loans typically have lower interest rates than non-conforming loans, the increase in the limits next year should benefit many California homebuyers, especially since home prices are expected to grow modestly in the upcoming year, said the CAR report.
Sales at brick-and-mortar stores were somewhat lackluster, with a growth of 0.7% from last year, while e-commerce sales had a much more robust jump of 14.6% from 2024.
Adobe Analytics also indicated that U.S. shoppers spent $10.8 billion online on Black Friday, which is more than double what consumers spent online on Black Friday in 2017.
Shoppers are also more willing to finance their purchases in 2024, with 8.8% more consumers using a “Buy Now, Pay Later” option this year than last year, said the Adobe data.
Spending in stores and online from November 1 through December 24 is projected to be up 3.2% year-over-year, the CAR report pointed out.
Interest rates continued to recover in the past two weeks after reaching a 4-month high in early November, said CAR.
As of December 2nd, the average 30-year fixed rate mortgage (FRM) reported by Mortgage News Daily was at 6.91%, a tad higher than the day before but remained close to the one-month low recorded last week.
In response to lower rates, purchase activity rose in the week ending November 22, with the purchase application index rising 12% from the prior week. On a year-over-year basis, the index was up 52% from the same week in 2023. While the index was at the highest since February, it was still low by historical standards. Refinancing activity continued to be slow, with its index dropping 3% from the prior week, but was 119% higher than last year’s level.
Sales of new single-family homes declined 17.3% on a month-to-month basis and registered a seasonally adjusted annual rate of 610k in October, the lowest level since November 2022, said the CAR report. With rates beginning to moderate in November, sales could bounce back in coming back, said the CAR report, as the latest NAHB housing market index suggests an improvement in buyer traffic and current/future sales in November.
Meanwhile, new housing inventory soared to 9.5 months, the highest level in two years. New for-sale units remained elevated and climbed 8.8% from last year to 481k.
