On a similar note...
On a similar note...
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Home sales have bounced back emphatically this fall, after cratering in April and May, according to the National Association of Realtors' report on October existing home sales. Buyers returned to the market in the summer after stay-at-home orders deterred them from buying homes in the spring, and the annual sales pace soared past 6 million in September and October.
Quick sales, rising prices
People are buying homes faster than new listings are being posted, which indicates that buyers are competing for a diminishing selection. There were 1.42 million homes on the market at the end of October, down 40,000 from the inventory in September and down 350,000 from October 2019. At the pace that homes were bought in October, it would take only 2.5 months for them all to be sold, and that's a record low supply.
With demand exceeding supply, home prices went up. October's median price of $313,000 was 15.5% higher than a year before. Low mortgage rates softened the blow of rising prices. The average rate on the 30-year fixed-rate mortgage was 2.95%, down substantially from October 2019's average of 4.04%.
It's remarkable that so many can afford to buy homes during a recession. Hundreds of thousands of people qualified for mortgages in October, despite a 6.9% unemployment rate and the lingering widespread financial pain.
It's difficult to envision home sales remaining this robust unless more owners put their homes on the market. The 2.5-month supply is already a record low. But with coronavirus infections quickly rising, would-be sellers may be reluctant to allow strangers into their homes — especially when they're being told to limit visits from friends and family during the holiday season.
What it means for sellers and buyers
When sellers do put their homes on the market, they can expect to sell quickly if they ask for an appropriate price; 72% of homes sold in October had been on the market for less than a month. On the other side of the transaction, buyers should make offers quickly when they find a home they want to buy, and they can expect to contend with competing offers.
Media: If quoting from this Commentary, the source is Holden Lewis, NerdWallet mortgages expert.