Existing-home sales improved in September, as the threat of rising mortgage rates likely compelled some buyers to lock in deals before the window of opportunity closed.
Existing-home sales increased 7% between August and September, hitting a seasonally adjusted, annual rate of 6.29 million, the National Association of Realtors said Thursday. Sales were down 2.3% compared to a year ago.
Economists polled by MarketWatch had projected existing-home sales to come in at 6.1 million.
Rising inventory in previous months allowed for September s increase in home sales, said Lawrence Yun, chief economist for the National Association of Realtors. But that extra inventory was quickly gobbled up.
Total housing inventory fell 0.8% between August and September, and was down 13% compared to a year ago. As of the end of the month, unsold inventory was at a 2.4 - month supply. A 6 month supply is considered to be indicative of a balanced market.
As mortgage forbearance programs end and as homebuilders ramp up production — despite the supply chain material issues — we are likely to see more homes on the market as soon as 2022, Yun said in the report.
The median price for an existing home was $352,800, up more than 13% from a year ago. On a regional basis, every part of the country saw an increase in sales, led by an 8.6% jump in the South.
The big picture: Rising interest rates may serve as an impetus for buyers to buy.
Most housing economists expect home sales to moderate in the coming months, returning to a more typical pace for this time of year, especially when compared with last autumn's feeding frenzy in the real-estate market. But there s one factor that could nudge some buyers to rush to purchase a property now: Mortgage rates.
Rising mortgage rates will motivate some buyers on the margin to make purchases ahead of a potentially bigger move in rates as the Fed starts tapering, Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a research note.
What they re saying: Higher prices will lead to FOMO October 2020 marked the peak of home sales activity in the last 12 months, as the shock of COVID quarantines gave way to a frantic search for housing solutions in the new normal of pandemic social distancing and remote work. The pace of sales has since been moderate and almost a year later, we are looking at more typical seasonal cooling this autumn, said George Ratiu, manager of economic research at Realtor.com.
Demand is probably finding some support from millennials pulling forward their future buying plans, as record price hikes prod a FOMO reaction, Michael Gregory, deputy chief economist at BMO Capital Markets, said in a research note, referring to the fear of missing out. And mortgage rates, despite drifting up, remain historically low. The Dow Jones Industrial Average DJIA and the S&P 500 SPX were both down slightly in Thursday morning trading ahead of the release of the report.