According to an article in aol.com, sales of existing homes in the US reached a six and a half year high last month with buyers anxious to take advantage of cheaper borrowing costs amid worries that mortgage rates could rise.
Figures from the National Association of Realtors showed that sales of existing homes increased to reach an annual rate of 5.48 million units in August, a rise of 1.7%. This is the highest level of sales since February 2007 and is more than expected. Economists had predicted that sales of previously owned homes would increase to 5.25 million units. The chief economist for the National Association of Realtors has pointed out that the property market may be experiencing a temporary peak due to the fact that more buyers who would previously have adopted a wait-and-see approach, have chosen to purchase property due to concerns over possible increases in borrowing costs, and in house prices. During the coming months the number of sales could fluctuate, not least because of tighter inventory levels in certain areas of real estate.
The rate for a 30 year fixed rate mortgage is currently around 4.5% which is a two-year high. There had been concerns that the rates could increase further as many experts thought the Federal Reserve would begin to wind down its stimulus program. However it has decided not to scale back this program for the moment. If it had chosen to scale back the stimulus program then this could have pushed mortgage rates higher still.
The inventory for unsold homes currently listed on the market increased slightly in August, representing a 4.9 months’ supply. This is still well below the six month supply that’s normally seen as a sign that the market is balanced between supply and demand.
In August, the median home sales price increased to reach $212,100 which is 14.7% more than a year ago. Short sales, foreclosures and distressed properties accounted for approximately 12% of sales in August, which is the lowest level since the National Association of Realtors began tracking these figures in 2008. Last month first-time buyers bought 28% of homes sold, while investors accounted for another 17% of property sales. The increase in home prices combined with rising mortgage rates has already begun to price some first-time buyers out of the housing market.