Sales Up as Buyers Rush to Lock in Mortgage Rates
Home buyers may have felt more determined in November to purchase before 2021 comes to an end and mortgage rates and borrowing costs increase, as largely is forecasted to happen.
Existing-home sales, which include completed transactions for single-family homes, townhomes, condos, and co-ops, rose 1.9% in November compared to October, the National Association of REALTORS® reported Wednesday. Sales, however, are down 2% compared to a year ago.
“Determined buyers were able to land housing before mortgage rates rise further in the coming months,” says Lawrence Yun, NAR’s chief economist. “Locking in a constant and firm mortgage payment motivated many consumers who grew weary of escalating rents over the last year. Mortgage rates are projected to jump in 2022. However, I don’t expect the imminent increase to be overly dramatic.”
Yun has forecast the 30-year fixed-rate mortgage to average 3.7% by the end of 2022. For comparison, Freddie Mac reported 30-year rates averaged 3.12% last week.
Here’s a closer look at key housing indicators from NAR’s latest housing report, reflecting November home sales data:
Home prices continue to rise—but likely not at this pace much longer: The median existing-home price for all housing types was $353,900 in November, up 13.9% from November 2020. Prices rose in every major region of the U.S., with the South registering the highest appreciation in home prices.
Yun expects that inflation and the pace of price appreciation will subside in 2022. Economists at the NAR’s third annual Real Estate Forecast Summit predicted home price increases to moderate at 5.7% next year. Read more news from NAR’s forecast summit: Housing Market Likely to ‘Normalize’ in 2022
Housing inventories move even lower: The number of homes for sale fell 9.8% in November compared to October, and are down 13.3% compared to a year ago. Unsold inventory sits at a 2.1-month supply at the current sales pace. “Supply-chain disruptions for building new homes and labor shortages have hindered bringing more inventory to the market,” Yun says. “Therefore, housing prices continue to march higher due to the near-record-low supply levels.”
Homes continue to sell fast: Eighty-three percent of homes sold in November were on the market for less than a month. Properties typically stayed on the market for just 18 days in November, the same as October but down from 21 days in November 2020.
Investors remain a strong presence: Individual investors or second-home buyers purchased 15% of homes in November, up from 14% a year ago. They also tend to account for the biggest bulk of all-cash sales, which made up 24% of transactions in November. Meanwhile, first-time home buyers continue to struggle to compete. They comprised 26% of sales in November, down from 32% a year earlier.
Here’s a closer look at how existing-home sales fared across the country in November, according to NAR’s sales report:
Northeast: Existing-home sales held steady in November compared to October at an annual rate of 760,000. Sales were down 11.6% compared to November 2020. Median price: $372,500, up 4.7% from one year ago
Midwest: Existing-home sales eked out a 0.7% monthly increase to reach an annual rate of 1.52 million in November. That is down 0.7% from a year ago. Median price: $260,100, a 9% jump from November 2020
South: Existing-home sales increased 2.9% in November, reaching an annual rate of 2.85 million. That marks a 1.1% increase compared to a year ago. Median price: $318,900, up 18.4% compared to a year ago
West: Existing-home sales rose 2.3% in November compared to October, reaching an annual rate of 1.33 million. Sales were down 3.6% compared to a year earlier. Median price: $507,200, up 8.4% from November 2020
Source: REALTOR® Magazine