The improvement in the number of houses for sale, combined with rates still hovering below 3%, encouraged many buyers to continue searching for their next home. Sales of existing homes jumped by 7.0% in September from the prior month, to an annual pace of 6.29 million. However, the pace was 2.3% lower than a year ago, when the market was on a sharp upward rebound trajectory.
Sales activity was higher across all geographic regions, with a solid boost from the South. The median price of homes sold during September reached $352,800, a 13.3% jump from 2020. Importantly, sales of homes at prices below $250,000, where many first-time buyers were active, dropped at double-digit rates. Homes priced over $1,000,000 showed the strongest gain. The inventory of available homes dropped again, reaching only 2.4 months of supply.
October 2020 marked the peak of home sales activity in the last 12 months, as the shock of COVID quarantines gave way to a frantic search for housing solutions in the new normal of pandemic social distancing and remote work. The pace of sales has since been moderating, and almost a year later, we’re looking at more typical seasonal cooling this autumn. Many homeowners continue to be stymied by tight inventory as they look for their next home, keeping the number of sellers listing existing homes tight. Meanwhile, with builders keeping a lid on the construction of new homes, the new supply pipeline is only adding to the inventory shortage and pushing prices higher. In addition, with the Fed expected to cut back its asset purchases, rising mortgage rates are impacting the affordability of monthly home payments.
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