The National Association of Realtors reported This Week in Real Estate that after two months of declines the Pending Home Sales Index recorded a significant increase in August. The Pending Home Sales Index is a forward-looking indicator of home sales based on contract signings. And, after nearly four months below 3% the 30-year fixed-rate mortgage averaged 3.01% this week. Below are a few newsworthy events from the final week of September that influence our business.
Housing Market Can Look Forward to a More Boring 2022. After a year of soaring home prices and problems getting essential materials such as lumber, buyers and builders took a moment earlier this year to catch their breath and reassess the state of the housing market. That gave us a few months of declines in new home sales and building permits, rising inventories of existing homes, and an end to historically high prices in lumber. Now the market is shifting again, hinting at 2022 that might even be considered somewhat normal: steadier production and supply to meet solid demand for homes, but with more typical levels of price appreciation. While supply-chain problems and some inventory constraints are likely to persist into next year, both buyers and builders seemed to be getting more comfortable with the current environment. Even if the market is somewhat cooler compared with early in the year, it’s still historically strong. The NAHB housing market index increased by a point this month – the first signs of stabilization in months – suggesting that either supply chain problems or buyer demand is at least not getting worse.
Pending Home Sales Recover 8.1% in August. Pending home sales rebounded in August, recording significant gains after two prior months of declines, according to the National Association of Realtors. Each of the four major U.S. regions mounted month-over-month growth in contract activity. The Pending Home Sales Index (PHSI) increased 8.1% to 119.5 in August. “Rising inventory and moderating price conditions are bringing buyers back to the market,” said Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.” The index in the West grew 7.2% in August to 107.0.
Mortgage Rates Back Above 3%. Will They Keep Rising? The 30-year fixed-rate mortgage averaged 3.01% this week, posting a sharp rise after spending nearly four months below 3%. Economists expect mortgage rates to continue to increase modestly over the next few months. An increase in mortgage rates over the next few months – even though expected to be slight – “will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year,” Khater adds. Still, mortgage rates are hovering near their record lows. “Consumers shouldn’t panic,” Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS, writes on the association’s blog. “Keep in mind that even though rates will increase in the following months, these rates will still be historically low.” NAR forecasts the 30-year fixed-rate mortgage to average 3.5% by mid-2022.
Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate and Berkshire Hathaway HomeServices Real Estate Professionals are eligible to receive no-obligation home warranty coverage from American Home Shield or 2-10 Home Warranty the first six months the home is listed with our company?