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The average U.S. home price rose 19.5 percent during the 12 months ending 30 September, compared to a 19.8-percent jump for the year ending 31 August, according to data from the S&P CoreLogic Case-Shiller National Home Price Index.
Sticker shock deterred some buyers, The Wall Street Journal reported.
Still, the number of homes up for sale remains near record lows and many homes sell in a matter of days after receiving multiple offers, the WSJ said.
Sales of existing homes will notch a record volume this year, the WSJ noted, even as prices have reached record levels.
Since September, mortgage interest rates have risen, reaching an average of 3.1 percent nationwide on 1 December, according to the Federal Home Loan Mortgage Corporation, after finishing September at 2.9 percent.
Higher rates will deter or disqualify some potential buyers.
The median selling price of an existing home in October rose 13.1 percent to $353,900, compared to October 2020, the National Association of Realtors (NAR) reported.
Also in October, the proportion of first-time home buyers fell to 29 percent, down 3 percentage points year over year, the NAR said.
TREND FORECAST: The housing market may remain at strength for a few more months as the few remaining buyers able to pay cash or qualify for a mortgage make their purchases to beat the Fed’s higher interest rates due next summer if not before.
However, the housing market will cool markedly from the second half of 2022: mortgage interest rates will rise, builders will still be short of materials and workers, and today’s high rents (“Apartment Rents Climbing,” 20 Jul 2021) will prevent millions of households from saving enough to make the sizeable down payments that lenders now demand, especially for first-time buyers.
As we have noted, the high-flying market for homes will keep millions renting, which will grow the number of apartments being created over the next several years.