Despite rising mortgage rates, home buyers appear undeterred by higher financing costs and home prices.
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Courtesy REALTOR Magazine
Contract signings climbed 7.5% in October, and home sales for 2021 are on pace to hit a 15-year high, the National Association of REALTORS® (NAR) reported Monday. Pending home sales rebounded after a decline in September.
Contract activity increased month over month in all four major regions of the U.S. NAR’s Pending Home Sales Index is a forward-looking indicator of home sales based on contract signings.
“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” says Lawrence Yun, NAR’s chief economist. “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.”
Yun notes that the gain in October assures that total existing-home sales in 2021 will exceed 6 million. That will mark the top performance in home sales in 15 years, Yun says.
He does forecast, however, home prices will increase at a “gentler pace” over the next several months and expects demand to be milder as mortgage rates increase. The 30-year fixed-rate mortgage averaged 3.10% last week, up from a 2.72% average a year ago, Freddie Mac reports.
Last month, contract signings increased at the strongest pace in the Midwest and South regions. The Northeast increased 6.9% in October, but contract signings are still down 10% from a year ago. The Midwest saw contract signings climb 11.8% in October; pending home sales are up 5.1% from a year ago.
Source: National Association of REALTORS®