U.S. Existing Home Sales Rise as Mortgage Rates Dip

U.S. Existing home sales rise 3.4%, showing signs of recovery in the market. This increase follows a brief dip in mortgage rates, boosting buyer confidence. It marks the first year-over-year growth in home sales since July 2021. The housing market’s recovery highlights improving affordability and demand for homes. The uptick suggests positive momentum for the housing sector moving forward.

Positive Market Response to Lower Rates

In late September, the average 30-year fixed mortgage rate fell to 6.08%, the lowest point in two years, according to Freddie Mac. This decline provided some relief for buyers, making homes more affordable and encouraging activity in the market.

First Year-over-Year Growth in Over Three Years

October’s sales were up 2.9% compared to the same month in 2023, surprising economists who had forecasted a 2.9% increase. The data reflects decisions made when rates were lower, in August and September, before they began climbing again.

Market Challenges Persist Despite Uptick

While the recent increase in mortgage rates to 6.78% could slow the momentum, many buyers have adjusted to the new rate environment. Lawrence Yun, chief economist at the National Association of Realtors (NAR), stated that buyers are now accepting that mortgage rates are unlikely to return to their previous lower levels.

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Limited Inventory and Rising Prices

The median price for an existing home in October was $407,200, a 4% increase from the previous year. Although the number of homes for sale remains below average, inventory has been rising, providing more options for buyers.

A Glimpse of Hope for Homebuyers

In Olympia, Wash., buyers Christie and Mark Seeley capitalized on the lower rates, purchasing a three-bedroom home after negotiating with the seller. It was perfect timing for us, said Mark Seeley. Rates are now much higher.

Future Outlook for Home Sales

Despite the current market uptick, 2024 is still projected to see the lowest home sales since 1995. Mortgage rates would need to fall below 6% for a more substantial recovery, according to Odeta Kushi, deputy chief economist at First American Financial.

Navigating a Changing Market

With increasing inventory and a shift in buyer expectations, more opportunities are emerging. More inventory is clearly helping boost home sales, even with the current elevated mortgage rates, Yun noted, signaling a cautious but hopeful outlook for the housing market in the coming months.