With a Decline in Interest Rates, Home Sales Went Up in October

I believe it was about 4-5 years ago, we decided to move from our of 2600 square feet on 2/3rds of an acre. We also wanted to get to some place warmer. We did eventually do both and not exactly where we wanted.

The first year we went exploring in the areas around Phoenix and found some nice developments we could live in and afford. Put the house on the market. First realtor was a good guy. Did everything he could, but no action. We tried another realtor, a name brand, and aggressive. No actions.

We did bug the house and listened to some interesting conversations. Not serious, kids running around and digging into dresser, one realtor sitting at the kitchen table conducting business’ etc. Just garbage and a lack of professionalism.

The last guy came by recommendation. In two weeks the house sold and there were multiple bids. We took the cleanest deal although it was not the most. We stayed 6 more weeks (allowed to do so) and moved.

We get to AZ and all the deals we saw changed. We were bidding $10,000 over and were outbid by more or cash bids. We finally got into a new home with 3% down and a mortgage rate of 2.6%. Our payment was a little bit more than our old home.

What I am seeing now is crazy. High prices and mortgage rates. There will be fallout amongst buyers even with a slightly lower mortgage rate. It is still not where it should be. With the economy, companies can raise prices, sell smaller amounts for the same price, or cut back on production to improve profits like they also did in 2008.

Home Sales Rose in October Following Decline in Mortgage Rates – WSJ

Sales of existing homes rose in October, reflecting a short-lived drop in mortgage rates that improved affordability for buyers and produced the first year-over-year gain in sales in more than three years. 

The average rate for a 30-year fixed mortgage slid throughout the summer and reached a two-year low in late September, according to Freddie Mac. 

Lower rates lured some home buyers off the sidelines and sparked some hope among real-estate agents that a boost in activity during the fall could salvage another slow year for sales activity. 

U.S. existing-home sales in October rose 3.4% from the prior month to a seasonally adjusted annual rate of 3.96 million, the National Association of Realtors said Thursday. Economists surveyed by The Wall Street Journal had estimated a monthly increase of 2.9%. 

October sales rose 2.9% from a year earlier, the first year-over-year increase in sales since July 2021. 

Homes typically go under contract a month or two before the contracts close, so the October data largely reflect purchase decisions made in September and August when rates fell on their way to a low of 6.08%. 

But rates have started rising again and stood at 6.84% this week, potentially stalling some of the market’s momentum.

“People are accepting that the mortgage rates, the new normal, is not going to be 3% or 4% or 5%,” said Lawrence Yun, NAR’s chief economist.

Home sales in 2024 are still on track to hit the lowest level since 1995.

Christie and Mark Seeley jumped into the market in September when they found a three-bedroom home in Olympia, Wash., on nine acres of land. The home had been sitting on the market since July and the price had been reduced. The Seeleys offered the asking price and asked the seller to contribute to their closing costs, and their offer was accepted.

They bought the home in October with a 5.875% mortgage rate, after paying extra to their lender to reduce their mortgage rate.

“It was the perfect timing for us, because now I know rates are way higher,” Mark Seeley said. “We were very fortunate.”

The recent increase in mortgage rates has reduced expectations for home-buying activity in 2025. Many first-time buyers are priced out of the market at current rates and prices, and homeowners with low rates on their current mortgages are reluctant to give them up by selling and moving.

Mortgage rates would need to fall below 6% for sales to pick up, said Odeta Kushi, deputy chief economist at First American Financial. U.S. median existing-home price, change from a year earlier Source: National Association of Realtors Note: October 2024 is preliminary.

“Any improvement in mortgage rates is welcome,” she said. But “people want a 5 on the left-hand side of that decimal point.”

The national median existing-home price in October was $407,200, a 4% increase from a year earlier, NAR said.

Though the number of homes for sale remains lower than normal, it has been rising, giving buyers more options and making it easier for them to negotiate.

“More inventory is clearly helping boost home sales, despite this elevated mortgage rate condition,” Yun said.

Nationally, there were 1.37 million homes for sale or under contract at the end of October, up 0.7% from September and up 19.1% from October 2023, NAR said.

At the current sales pace, there was a 4.2-month supply of homes on the market at the end of October. That is at the low end of what is considered a balanced market between buyers and sellers.

Terence and Christine O’Neill decided to move to a bigger home in Pearl River, N.Y., after having a second child, even though it would require giving up a 3% mortgage rate.

They put in a few offers on homes earlier in the year but got outbid by other buyers. The market slowed by the end of the summer though. The O’Neills bought a three-bedroom house in October for $830,000, about 5% below the listing price.

“It doesn’t get us 100% of what we wanted, but it gets us most of what we wanted,” Terence O’Neill said. “It’s definitely a tricky market.”