Sales of previously owned homes in the US increased for a second straight month, as the prospect of higher mortgage rates on the horizon helped fuel demand.
Existing home sales rose 0.8 per cent in October against the previous month, the National Association of Realtors said on Monday, bucking expectations for a decline. Sales hit a seasonally adjusted annual rate of 6.34m, compared with economists’ forecast of 6.2m.
The US housing market has been red-hot for much of the pandemic with demand coming from remote workers and other buyers who wanted more space in the suburbs. Home sales have also received a boost from record-low mortgage rates.
But mortgage rates have recently climbed off their lows to hover around 3 per cent, and a surge in property values have priced out some buyers amid strong demand and a dearth of properties listed for sale.
“Home sales remain resilient, despite low inventory and increasing affordability challenges,” said Lawrence Yun, chief economist at the NAR. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”
Yun added that the shift to remote working arrangements, coupled with record highs in stock markets and home prices, have led to elevated housing demand in vacation destinations.
The median price for existing homes was $353,900 last month, according to the NAR. That was up from $351,200 in September but remained below a record high of $362,800 in June.
First-time buyers accounted for 29 per cent of October sales, compared with 32 per cent a year ago.