Home Sales Rise in August, Rates Continue Increase
Existing home sales rose to the highest level since before the onset of the Great Recession, the National Association of Realtors (NAR) reported. There were 5.48 million homes sold in August, which is a 6.5% increase from July.
Inventory for existing homes for sale increased to 2.25 million in August, up from 2.24 million in July. This information comes on the heels of the Federal Open Market Committee’s announcement that tighter rates could be hindering the economic recovery and announced it would continue its monetary stimulus policy.
The NAR report warned the strong sales pace might only be a “temporary peak.” The association’s chief economist warned that “tight inventory is limiting choices in many areas” and that “rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead.”
The South and the Midwest saw stronger activity in August, where the sales pace increased by 80,000 and 40,000, respectively. The NAR does caution against comparing month-over-month price comparisons, citing that it “does not compensate for seasonal changes, especially for the timing of family buying patterns.”
First-time homebuyers accounted for 28% of August sales, which is a decrease from 29% in July. Interestingly enough, all-cash sales made up 32% of transactions in August – a result of the recent rise in rates.
Do you think that home sales will continue to increase as long as the stimulus policy is still in place?