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Three Existing Home Sale Trends to Note Now

Home Prices Continue to Increase Nationally and Across Regions

Home prices continue to climb across the country, according to the National Association of Realtors data for September, which was released recently. The median existing-home price nationally was $258,100 in September, a rise of 4.2% from September 2017’s median of $247,600.

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The gain in median home prices, in fact, was the seventy-ninth consecutive month that housing prices have advanced.

Prices rose in all regions on the country. In the Northeast, the median price hit $286,200, climbing 4.1% year over year. In the midwestern states, the median price rose 1.9% year over year, to reach $200,200. In the South, the median price was $223,900, climbing 3.0% year over year. The West tied with the Northeast in the percentage rise, at 4.1% year over year, but had the highest median home prices, at $388,500.

Inventory Increased Year Over Year

Total housing inventory nationwide also rose year over year, at 1.88 million existing homes versus 1.86 million in September 2017. The inventory did decelerate in September from August, however, as inventory stood at 1.91 million in August 2018.

Some deceleration in sales was noted as well, with unsold inventory currently standing at a 4.4-month supply versus 4.2 months in September 2017 and 4.3 in August 2018.

Rising inventory is a sign that houses are standing unsold a bit longer. NAR officials noted, however, that the recent rise in inventory was in comparison to a “super-heated” pace earlier in 2018.

The inventory also rose nationwide.

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First-Time Buyers Increasing, But Prices and Interest Rates a Concern

The continuing rise in home prices across the country is an issue for first-time homebuyers because this group traditionally has lower purchasing power. Home price appreciation works to hurt them rather than help them.

Despite this, however, the percentage of first-time buyers rose in September, to 32% of sales from 29% in September 2017 and 31% in the prior month.

NAR officials speculated that buyers are still struggling with advancing home prices and climbing interest rates, but that the strong job market was allowing them to enter the housing market.

What Does the Future Hold?

The rise in home prices across the country signals a strong real estate market. However, the increase in inventory and the rise in time on the market could also indicate a very slight slowing in the pace of real estate sales, which might eventually either stop home price increases or send them into a decline.

Continually rising home prices will eventually become a concern for the real estate market, especially in the current interest rate climate. Interest rates have been rising incrementally since late 2015 and are forecast to advance more next year. Both rising home prices and rising interest rates make mortgages more expensive. First time home buyers especially could be hit by the twin forces of climbing prices and advancing rates.

That continually rising prices are a concern may have been reflected in September’s hottest real estate markets, which except for one, were far away from expensive West Coast and Northeast cities. In terms of time on market and views per property, the hottest markets were Midland, Texas; Fort Wayne, Indiana; Odessa, Texas; and Columbus, Ohio. Only Boston-Cambridge-Newton, Massachusetts was an exception.

How Loan Sale Advisers Can Assist Mortgage Lenders

While rising prices indicate a robust market, continually rising prices and climbing interest rates may eventually stall the real estate market, especially for first-time home buyers. Mortgage lenders need to pay attention to asset management to ensure that they can optimize profits and manage future risk.

For more information, contact us today.