Home Sales Jump as Buyers Aim to Beat Rising Rates
October 21, 2021
Existing-home sales rebounded in September as buyers may have felt a sense of pressure as mortgage rates started to inch up. Existing-home sales rose by 7% in September compared to August. All major regions of the country posted increases last month, the National Association of REALTORS® reported Thursday.
“Some improvement in supply during prior months helped nudge up sales in September,” says Lawrence Yun, NAR’s chief economist. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.” The 30-year fixed-rate mortgage averaged 2.90% in September, but rates are rising.
Despite last month’s uptick, total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—were down by 2.3% in September compared to a year ago.
Home prices continue to rise as inventories remain constrained. Housing inventory is down 13% compared to a year ago. Unsold inventory is at a 2.4-month supply at the current sales pace, NAR reports.
But a turnaround could be coming. “As mortgage forbearance programs end, and as home builders ramp up production—despite the supply-chain material issues—we are likely to see more homes on the market as soon as 2022,” Yun says.
Here’s a closer look at NAR’s latest existing-home sales report:
Home prices: The median existing-home price for all housing types in September was $352,800, up 13.3% compared to a year ago. Prices rose in every region last month.
Days on the market: Eighty-six percent of homes sold in September were on the market for less than a month. Properties typically remained on the market for 17 days last month, down from 21 days a year ago.
First-time buyers: First-time buyers comprised 28% of sales in September, down from 31% in September 2020. “First-time buyers are hit particularly hard by the historically high home prices as they largely do not have the savings required to buy a home or equity to offset such a purchase,” Yun says.
All-cash sales: All-cash transactions made up 23% of transactions in September, up from 18% in September 2020. Individual investors or second-home buyers, who account for the bulk of cash sales, purchased 13% of homes in September, up from 12% in September 2020.
Distressed sales: Foreclosures and short sales represented less than 1% of sales in September, matching a year ago. Read more: NAR: No Need to Panic Over Foreclosure Spike
Here’s how existing-home sales fared across the country in September:
- Northeast: Existing-home sales increased by 5.5% last month, posting an annual rate of 770,000, an 8.3% increase compared to a year ago. Median price: $387,200, up 9.2% from a year ago.
- Midwest: Existing-home sales increased by 5.1% to an annual rate of 1.44 million in September, a 2.7% drop from a year ago. Median price: $265,300, up 9.1% from a year ago.
- South: Existing-home sales rose 8.6% in September, reaching an annual rate of 2.77 million, unchanged from a year ago. Median price: $307,500, a 14.8% rise from one year ago.
- West: Existing-home sales increased by 6.5%, registering an annual rate of 1.31 million in September, down 3% compared to a year ago. Median price: $506,300, up 8.3% from September 2020.
Updated: May 17, 2022