Despite the high prices, home buyers are not backing down.
- Sales of existing homes increased 0.8% in October from September.
- They are now on their way to reaching their highest level in 15 years.
It is often the case that home sales peak in the spring and summer and then begin to decline as the year draws to a close. But so far that has not happened this year.
In total, this year’s home sales are on track to surpass the 6 million mark. This would represent the highest number of existing homes sold since 2006.
Despite the challenges, homebuyers aren’t holding back
This year has been a difficult year for potential home buyers. There have been an extremely limited number of homes available on the market, and this has resulted in many properties this year finding themselves subject to bidding wars.
Bidding wars are great for sellers because they usually result in higher selling prices. They can also drive up house prices in general.
This is what happened this year, without a doubt. The National Association of Realtors reports that the median selling price of existing homes in October was $ 353,900. This is a 13% increase from October 2020. It also marks 116 straight months of year-over-year house price increases. It’s the longest streak ever recorded.
So why are buyers clamoring for homes when the supply is low and the prices are so high? We can thank the low mortgage rates for this.
While mortgage rates haven’t hit the same all-time highs as last year, they have still been fairly competitive throughout 2021. Buyers looking for affordable financing have been willing to pay for homes.
The interest of buyers is compounded by the fact that rental prices have also skyrocketed this year. After many landlords were forced to offer big discounts in 2020 to get tenants to sign leases, this year they are moving forward with rent increases. For some buyers, buying their own home may, at this point, make more financial sense than paying a premium for a rental in which they cannot build equity in their home.
Will 2022 be the best time to buy a house?
It’s hard to say. There’s a good chance mortgage rates will stay competitive for much of the new year. But if home inventories open enough to drive home prices down, that’s another story.
At the end of October, there were only 1.25 million homes for sale. This represents a decrease of 12% compared to the previous October. It also means that the housing market has only about half the number of homes it needs to create a more balanced scenario where neither buyers nor sellers clearly have the upper hand.
If things improve when it comes to the pandemic and the economy continues to recover from the blow it suffered in 2020, we could see more homes listed as 2022 progresses. But that’s not guaranteed, so 2022 could be another tough year on the home buying front.
A historic opportunity to potentially save thousands on your mortgage
There is a good chance that interest rates will not stay at multi-decade lows any longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger to buy a new home.
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