As mortgage rates approach near historic lows, there has been a high increase in home buying. According to recent statistics, US home sales rose 1.3% to the highest level in 17 months. Furthermore, the National Association of Realtors stated that homes sold last month at a seasonally adjusted annualized rate of 5.49 million units, the best performance since March 2018.
The recent increase in home sales are a sign of US consumer’s strong resilience, despite a darkening outlook for overall economic growth. Cheaper borrowing costs have resulted in improved affordability for buyers, making them more eager to buy despite rising property prices and a shortage of properties for sale.
The median sales price rose 4.7% from a year ago to $278,200, outpacing average wage gains.
Overall, home buyers are benefitting from the recent economic uncertainty, due to President Trump’s ongoing tariff war against China. The 30 year mortgage rate averaged only 3.73% this week. However, the upside is limited due to a shortage in properties available for sale. There were only 1.86 million properties listed for sale at the end of August, down 2.6% from a year ago. The inventory shortage appears to be most pronounced in starter homes priced below $250,000, while sales of homes priced between $250,000 and 1 million have drastically risen.