On Wednesday, October 21, 2020, real estate agent Rebecca Van Camp posted “Sold” on a sign in front of a home in Meridian, Idaho placard.
Darling Oswald | Forum News Service | Getty Images
According to data from the National Association of Realtors, second-hand housing sales in October increased by 0.8%, with a seasonally adjusted annual growth rate of 6.34 million units. Sales are down 5.8% from October 2020. Last October was the cyclical high of the market.
This measure represents the closed sale of existing single-family homes and apartments in October, so contracts may be signed in August and September. The shutdown process takes an average of one to two months.
Real estate agents now predict that annual sales will exceed 6 million, which will be the highest sales since 2006.
Lawrence Yun, chief economist at Realtors, said: “Sales are still very strong, and I attribute it to the increasing number of jobs.”
Yun also pointed out that the number of investors in the market has increased, which may be due to the soaring rents of single-family houses. Investors accounted for 17% of buyers in October, up from 13% in September and 14% in October 2020. All cash buyers accounted for 24% of buyers. Most investors use cash.
First-time home buyers accounted for 29% of sales, up from 32% a year ago. Historically, this share is about 40%.
The supply of existing homes for sale continues to be weak. There were 1.25 million homes for sale at the end of October, a 12% year-on-year decrease. At the current sales rate, this represents 2.4 months of supply. Five to six months of supply is considered a balanced market between buyers and sellers.
Weak supply and strong demand pushed the median price of existing homes to $353,900. This is 13.1% higher than in October 2020.
By price category, sales of homes priced below US$250,000 fell 24% year-on-year. Sales of homes priced between US$750,000 and US$1 million increased by 25%. Sales of homes with more than one million dollars increased by 31%.
Home buyers in October did not get rid of mortgage interest rates. From early August to September, they rose steadily. According to the Mortgage News Daily, on August 3, the average interest rate for popular 30-year fixed loans was 2.78%. As of October 29, this figure was 3.22%. The interest rate as of last Friday was 3.16%.
The latest data on new home sales in September shows a 14% increase from August. Due to the insufficient supply of existing homes for sale, builders continue to see strong demand. However, some of the largest national builders said they are slowing sales due to supply chain and labor issues. They worry that they may not be able to deliver the house on time.
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