The pace of existing home sales rebounded in September to the second highest pace since 2007. As chatter about the eventual rise in interest rates becomes more pervasive in the media, a sense of urgency has helped push more buyers back into the market. Inventory has remained tight on a national level with demand remaining high; however, the opportunity for large equity gains in many markets has kept sellers active and price increases remain at a sustainable level.
The actual number of homes for sale in September was down 3.1% compared to the same month of the previous year. This led to the months supply of inventory, which measures the relationship between supply and demand, to fall to 4.8 months. This number remains tight as low interest rates spur buyers to enter the market. New home construction has recently shown signs of increasing; however, this recent uptick has not yet been enough to alleviate pressure on existing homes.
Home prices continued their seasonal decline in September despite the uptick in demand. The median home price was $221,900 according to the National Association of Realtors; this was a decrease of 2.9% from August and a year-over-year increase of 6.1%. As we move into the fall months, we should begin to see some seasonal alleviation on prices; however, year-over-year gains will likely remain strong.
Homes sold at a seasonally adjusted annual rate of 5.55 million homes in September, an increase of 4.7% from August, and up 8.8% from the same month last year. As people move to lock in low interest rates at the end of this year, we are seeing a rebound in sales in contrast to the usual seasonal decline.
Interest rates continued to slide downward, prompting a surge in buyer activity as people looked to capitalize on low rates before they begin to rise again. Currently, Freddie Mac reports the following figures: 30-year fixed rate, 3.79%; 15-year fixed rate, 2.98%; 5/1-year adjustable rate, 2.89%.