Sales of existing homes in the United States jumped 7% in September despite their record high prices as buyers appeared eager to lock in before a widely expected interest rate hike next year, the National Association of Realtors (RAC) said Thursday
WASHINGTON (Pakistan Point News / Sputnik - 21st October, 2021) Sales of existing homes in the United States jumped 7% in September despite their record high prices as buyers appeared eager to lock in before a widely expected interest rate hike next year, the National Association of Realtors (RAC) said Thursday.
"Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year," RAC said, reporting a sales of 6.29 million units in September versus the August tally of 5.88 million.
Analysts polled by US media had anticipated last month's sales of existing homes to be around 6.1 million.
"This is a good sign for the US housing market," economist Adam Button said in a post on ForexLive. "I think that economists are underestimating the upside from home prices from here."
While the majority of existing home purchasers are typically first-time buyers, there are also those committing on new properties for investment or speculation and taking out loans on their current homes to secure their new acquisitions, Button said.
"Home equity will be tapped and recycled into the economy while higher new home activity will provide a lift to activity and commodity prices," he said.
Dire housing shortages in the United States since the financial crisis of 2007/2008 and last year's coronavirus outbreak have sent home prices to record highs.
The median selling price for existing-homes in the United States rose 17.8 percent in July from a year earlier to hit a record high of $359,900, according to RAC.
Investment firms rushed to the realty market to buy after the economic crunch of 2007/2008 and 2020, snapping up properties at rock-bottom prices to earn steady income from rent. The trend accelerated as more institutional investors and individuals got into the game over the past year, sending prices higher and higher.
Despite the inflated market and a significant mismatch of demand versus supply, many buyers remain hopeful of locking in before the Federal Reserve raises interest rates sometime next year in what would be its first hike since the COVID-19 outbreak in March 2020.
