Home Sales Surge to 7-Month High as Mortgage Rates Dip
WASHINGTON, D.C. – Existing-home sales climbed to a seven-month high in September, signaling a potential shift in the housing market driven by declining mortgage rates. The National Association of Realtors (NAR) reported that sales increased, buoyed by a slight easing of borrowing costs after a period of rapid price increases.
The national median sales price climbed 2.1% in September from a year earlier to $415,200.This increase, while still substantial, suggests a moderation in the relentless price growth seen in recent years.The uptick in sales comes as mortgage rates, which began declining in July, continued to fall through September and into October.
Homes purchased last month likely went under contract in July and August, when the average rate on a 30-year mortgage ranged from 6.75% to 6.56%, according to Freddie Mac. The decline accelerated in September and this month, dropping the average rate as low as 6.27% last week. While lower rates are boosting purchasing power, borrowing costs remain elevated for many Americans.
The US median home sales price has risen 53% over the past six years, including the period when the housing market “superheated” during the initial years of the pandemic. Despite the price increases, a growing inventory is offering buyers more options.
There were 1.55 million unsold homes at the end of last month, up 1.3% from August and up 14% from September of the previous year,NAR reported. While this represents an increase in supply, it remains below the roughly 2 million homes typically available before the pandemic.
The ongoing shortage of affordable homes continues to disproportionately impact first-time homebuyers, who accounted for 30% of sales last month – a decrease from the ancient average of 40%.The Federal Reserve’s decision last month to cut its main interest rate for the first time in a year, amid concerns over the US job market, contributed to the rate decline.
