Home prices and home sales reached record levels in August 2013, fueled by buyers looking to get into the market while interest rates are low. In fact, August was the best month for home sales in more than six years, and the national median home price rose for the ninth month in a row, according to the NATIONAL ASSOCIATION OF REALTORS®.
However, the real estate market may have hit a temporary peak because of rising mortgage interest rates that pushed more buyers to close deals.
In the months ahead, “monthly sales are likely to be uneven because of several market frictions,” said NAR Chief Economist Lawrence Yun:
- Tight inventory is limiting choices in many areas.
- Higher mortgage interest rates mean affordability isn’t as favorable as it was.
- Restrictive mortgage lending standards are keeping some otherwise qualified buyers from buying.
Right now, there’s a 4.9-month supply of homes for sale, meaning sellers have the advantage in many local markets. “Limited inventory in some areas means multiple bidding remains a factor,” Yun said, adding that 17% of all homes sold above the asking price in August and 63% sold below list price.
The number of homes for sale were down in several regions of the country:
- -23.5% in Naples, Fla.
- -23.3% in Detroit
- -20.7% in Boston
Faced with more competition for homes, buyers offered higher prices. The national median existing-home price was $212,100 in August 2013, up 14.7% from August 2012. Those price increases could persuade more sellers to enter the market, said NAR President Gary Thomas.
In addition, homeowners’ equity continues to improve, which will encourage sellers who’d been sitting on the sidelines to list their home for sale, he said. “Most of those owners also will be buying another home, but higher levels of new-home construction going into 2014, combined with some reduction in demand from less favorable affordability conditions, will help to moderate price growth to more sustainable levels.”
A decline in the number of discounted foreclosures and short sales also helped buoy home prices. Only 12% of August home sales were distressed — compared with 23% in August of last year.
Here’s how median exisiting-home prices have change since August 2012:
- Single-family: $212,200, up 14.4%
- Condo: $211,700, up 17.7%
- Northeast: $268,800, up 7.6%
- Midwest: $166,100, up 10%
- South: $181,000, up 14.6%
- West: $287,500, up 18.8%