In August the seasonally adjusted annual rate of home sales jumped to the highest pace since February 2007, as many buyers made the effort to lock in rates before they rise any further. While rates have ticked down due to the Federal Reserve’s announcement that it would not taper its unconventional asset purchases in September, rates are still likely to slowly rise through the end of the year. Prospective buyers should take advantage of what is still a historically high level of affordability in the housing market before it diminishes. With inventory remaining tight in markets across the country, potential home sellers are still well- positioned to take advantage of the many buyers looking for opportunities and 18 months of year-over-year price increases.
Interest rates have moderated thanks to the Federal Reserve’s decision to continue its quantitative easing policies. 30-year fixed-rate mortgages are currently 4.32% with 15-year rates at 3.37% and 5-year adjustable rates at 2.63%. While the Fed’s policy announcement has helped rates in the near term, we should expect them to continue to increase as the overall economy improves.
Existing home sales were up 1.7% from July , hitting the highest mark since February 2007. The current annual pace of 5.48 million home sales represents a 13.2% increase over the same month last year and represents the twenty-sixth consecutive month of year-over-year increases. The recent spike in the rate of home sales is likely tied to the rise in interest rates in previous months, which caused buyers concerned about rising rates to get off the sidelines and lock in.
In August the median existing home price dipped slightly from the previous month to $212,100. Median price was down only 0.7% from July but was up 14.7% from last August. Home prices typically dip later in the year, so the current month- to- month trend is not concerning. However, the year-over-year rises in home prices bode well and will continue to help boost more homeowners out of negative equity positions.
The number of homes available for sale in August increased slightly but was not enough to keep up with the jump in buyer activity. This brought months’ supply of inventory, which takes into account inventory levels and sales rates, down 3.9% from last month to a current supply of 4.9 months of inventory.