Housing News

More Shoppers Took Advantage of Lower Mortgage Rates to Purchase Existing Homes

As mortgage rates came down, more home shoppers became new homeowners.

Existing homes sales were up 1.8% in August compared to the same month a year earlier, according to a National Association of Realtors (NAR) report. However, sales did dip 0.2% from July.

(Existing homes are previously lived in residences and don’t include new construction.)

“Home sales have been sluggish over the past few years due to elevated mortgage rates and limited [housing] inventory,” said NAR Chief Economist Lawrence Yun in a statement. “However, mortgage rates are declining and more inventory is coming to the market, which should boost sales in the coming months.”

Mortgage interest rates averaged 6.3% for 30-year, fixed-rate loans in the week ending Sept. 25, according to Freddie Mac data. That's down from rates hovering around 7% at the beginning of the year.

However, existing home prices continued to rise. The median sale price of these homes rose to $422,600 in August, up 2% year-over-year. This was the 26th month in a row that prices went up.

Homes on the resale market were more expensive than new construction, where the median price tag was $413,500 in August.

“Record-high housing wealth and a record-high stock market will help current homeowners trade up and benefit the upper end of the market,” Yun said in a statement. “However, sales of affordable homes are constrained by the lack of inventory.”

There were 1.53 million existing homes for sale in August, according to NAR. That was up 11.7% year-over-year, but down 1.3% from July.

Home shoppers have more time to make up their minds. Homes spent a median of 31 days on the market in August. That was a rise from 28 days in July and 26 days in August of last year.

Where are home prices rising and falling the most?

In the South, existing home sales rose 3.4% in August compared to the same month a year earlier. They dipped 1.1% from July. Home prices edged up 0.4% year-over-year to $364,100.

Sales also ticked up 3.2% year-over-year in the Midwest and increased 2.1% from July. Prices shot up 4.5% to $330,500.

In the Northeast, sales slipped 2% year-over-year and were down 4% from July. The median sale price was $534,200, up 6.2% from the previous year.

Existing home sales dipped 1.4% both year-over-year and month-over-month in the West. Prices edged up 0.6% to $624,300.