America’s home market has rapidly recovered since the early days of the Coronavirus Pandemic. Even while unemployment figures remain high compared to a year ago, home buying activity is strong.
In October, sales increased at the highest rate in 14 years. The median price of homes sold has also increased by around 16% compared to a year ago. Here’s what investors and those engaged in the home market need to know.
Swift Sales Made October One of the Best Months in Recent Memory
Home inventory is currently low, but this is good news for sellers. 70% of all homes sold in October were listed for less than a month. With today’s inventory, it would take less than three months to clear all currently listed homes.
The median price of homes sold in October was $313,000. A higher number of larger and luxury homes on the market contributed to the increase.
Condominium, co-op, single-family, and townhome sales were up by 46.6% in October when compared to the data at this time last year. Sequentially, sales in this category were up by 4.3% compared to the previous month.
Low Interest Rates Will Drive Demand
Real estate professionals have cited record-low interest rates and high demand for the impressive performance of the market. Analysts expect that strong growth will continue throughout the rest of 2020 and into 2021.
Interest rates have remained low thanks to a 0% to 0.25% target lending rate set by the Federal Reserve. This has kept mortgage rates accessible to families, even during an unprecedented economic and health crisis.
Relaxed lockdowns have also contributed to the increase in demand for new and pre-owned homes. Even as the Coronavirus Pandemic starts to peak again, many states are allowing freedom of movement with fewer restrictions than were seen earlier in the year.
While some sales will be “catch-up” sales generated by individuals and families who weren’t able to engage in the market earlier this year, the real strength is in the lower mortgage rates available today. The Federal Reserve is likely to maintain its rate throughout the rest of the year, and the economy is expected to recover slowly in the coming years. Current lending conditions will likely remain for all of 2021.
An Ideal Time to Be in the Home Market
Both sellers and buyers can benefit from current conditions. Sellers will enjoy the shorter listing times with lower costs and more competition thanks to low inventory. Buyers will enjoy the competitive mortgage rates that make home buying more affordable overall.
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