A home in North Patchogue, New York, has a “sold” sign posted by a real estate company.
Steve Forst | Newsday | Getty Images
A sharp drop in mortgage rates put homebuyers on high alert in October after a sluggish summer.
According to the National Association of Realtors, existing home sales rose 3.4% from September to 3.96 million units at a seasonally adjusted annual rate. Sales increased 2.9% compared to October last year, the first annual increase in more than three years.
This number is based on contracts signed and means most deals took place in August and September. During this time, average interest rates on the popular 30-year fixed mortgage were falling. According to Mortgage News Daily, August started at about 6.6% and fell to a low of 6.11% by mid-September.
“The worst of the downturn in home sales may be over, as increased inventory translates into more transactions,” NAR Chief Economist Lawrence Yun said in a release. “Further job growth and continued economic growth are certain, which will result in increased demand for housing. However, for most first-time home buyers, mortgage financing is very important. Mortgage interest rates Although it remains high, it is expected to stabilize.
As of the end of October, the number of units sold was 1.37 million, an increase of 19.1% from October 2023. In other words, at the current sales pace, inventory will provide 4.2 months’ worth of supply. Six months’ supply is still on the low side as it is believed to be balanced between buyers and sellers.
Tight supply continues to put upward pressure on prices. The median price of existing homes sold in October was $407,200, up 4% from a year ago. By price category, the higher end of the market is more active than the lower end.
“We need an additional 30% inventory just to return to the pre-coronavirus situation,” Yun said.
The proportion of all-cash buyers fell to 27% from 29% in October 2023. Although this remains a historically high level, it is likely that the rate has declined due to lower mortgage rates.
First-time buyers accounted for 27% of sales, down from 28% last year and still at a historically low level. Typically accounts for 40% of sales.
Mortgage rates are currently much higher, at 7.05% for a 30-year fixed term. But a new report from Redfin reveals that the number of potential buyers reaching out to agents has spiked recently, especially after the election. The so-called demand index rose 17% year-on-year in one week in mid-November, its highest level since August 2023.
“The surge in buyers and sellers jumping into the market is a result of pent-up demand from people who were waiting for the election to pass and the Fed to cut interest rates for a second time,” said Chen Zhao of Redfin Economic Research. lead. “We are now watching to see if this is a short-term post-election boom or a steady improvement in pending sales.”
