Home sales rose in November on hot job market, fears of rising rates
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HOUSTON TEXAS – August 12: Houston’s newly sold house is displayed in this photo on August 12, 2021. Low interest rates have led to an increase in home prices and the possibility of working remotely. The strong demand for homes continues to outstrip the supply, causing home prices to continue their upward trend in the second quarter. The median price of an existing single-family home sold in the United States increased 22.9% during the second quarter. (Photo by Brandon Bell/Getty Images).
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The National Association of Realtors seasonally adjusted number shows that November saw an increase of 1.9% in sales of pre-owned homes to 6.46 millions units. The November 2020 sales were 2.0% lower than the November 2020.
These home sales are likely to reflect closings in September or October.
The Northeast saw no change in regional sales month to month. They rose 0.7% in the Midwest and 2.9% in the South. Sales increased by 2.3% in the West.
Lawrence Yun (NAR chief economist), believes that sales increased because of a stronger job market, and potential buyers’ concerns about the possibility of higher mortgage rates in next year.
At the end November, there were 1.11million homes on sale. This is a 13% decrease year-over-year. This is a supply of 2.1 months at the current pace.
Yun said, “New listings will be coming onto the market quickly, but they’re being snatched-up quickly,” and that he anticipates a decline in inventories in December.
The tight supply has continued to increase home price pressure. In November, the median home price was 353,900. It is an increase of 13.9% over November 2020. Prices are now declining from the previous annual gains of around 20%.
The most expensive category saw sales rise with prices between $750,000-$1 million increasing 37% and 50% respectively, while those above $1,000,000 rose 50%. Homes priced between $100,000 to $250,000 declined 19%. The lower market has the lowest supply.
It is moving fast, too. On average, a house stays on market for just 18 days.
Just 26% was sold to buyers who were first time buyers, which is down from 32% November 2020. This was an increase of 15% from the 14% recorded last year.
Buyers were not helped by mortgage rates. Mortgage News Daily reported that the rate for a 30-year fixed mortgage, which is still quite low in historical terms, was 2.92% at the beginning of September, and 3.22% at the end of October. It took significant buying power away, particularly for new buyers or entry-level.
George Ratiu is senior economist at Realtor.com. “The possibility of higher interest rate in 2022 will accelerate the decision for buyers during an otherwise slow season,” he said. However, there is still a low supply of homes available for purchase, which continues to be a major problem for both homeowners and buyers looking for their next property.
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