During a light week for economic reports, investors remained focused on stronger-than-expected data released earlier this month. As faster economic growth can lead to higher future inflation, mortgage rates ended the week slightly elevated.
Existing Home Sales Hit a Low
In September, sales of existing homes experienced a minor drop from August, aligning with expectations and reaching the lowest level since October 2010. The median existing-home price rose to $404,500, marking a 3% increase compared to the same time last year. Inventories stayed constrained at just a 4.3-month supply nationally, significantly below the balanced market norm of six months. On the brighter side, inventory levels were 23% higher than a year ago, offering a glimmer of hope for buyers. For real estate, the continued low inventory keeps competition stiff among buyers, which could sustain home prices. Sellers may still have the upper hand, but they should be mindful of evolving buyer preferences and potential rate fluctuations.
New Home Sales See a Boost
While existing home sales make up about 85% of the market, new home sales, which represent the remaining 15%, showed growth. In September, new home sales increased by 4% from August and were 6% higher than a year earlier. The median new-home price rose to $426,300, a slight increase from the previous year. Unlike existing home sales, which are based on completed closings, new home sales measure signed contracts, making them a forward-looking indicator of housing market activity. For buyers, the uptick in new home sales suggests more options may be available, although slightly higher prices could be a consideration. Sellers of existing homes may face competition from new builds, especially in markets where affordability and modern amenities are key factors for buyers.
Encouraging Signs in Single-Family Housing Starts
The overall housing starts figure for September showed a small decline from August, but the details provided a more optimistic picture. The decrease was entirely due to multi-family units, while single-family housing starts rose by 3%, hitting their highest level in five months. Additionally, single-family building permits, which are a leading indicator of future construction, saw an increase. A separate survey from the National Association of Home Builders (NAHB) revealed a greater-than-expected rise in builder sentiment, reflecting confidence in the housing market. This is promising for the real estate market, as more single-family home construction could help alleviate inventory shortages and offer new opportunities for buyers. Sellers may want to watch these trends closely, as increased construction activity could impact pricing and demand dynamics.
What This Means for Real Estate
The mixed data presents a complex landscape for both buyers and sellers. For buyers, rising single-family housing starts and new home sales may present more options, but they should act with awareness of potential rate increases. Sellers might continue to benefit from low inventory in the existing home market but should remain strategic, especially as new construction becomes more of a factor.
Staying informed about housing market trends is crucial for making the best real estate decisions. Whether you’re buying or selling, understanding these shifts will help you navigate the current market with confidence.
