In October, buyers returned to the housing market despite rising mortgage rates.

According to the National Association of Real Estate Agents, contracts for existing homes known as pending sales have increased 7.5% since September. While sales were still 1.4% lower than in October 2020, they showed a cyclical high for the housing market last fall.

Pending sales are a predictive sales indicator that closes in a month or two. Wall Street analysts were not expecting any change in October’s exceptional sales from the previous month.

Sales completed in October increased unexpectedly.

“Encouraged by the rapid rise in rents and the expected rise in mortgage rates, consumers with solid financial resources will sign home purchase contracts as soon as possible,” said Lawrence Yun, chief economist at NAR. “This strong buy is proof that demand remains relatively high as it comes at a time when inventories are still very low.”

Sales were strongest in the Middle East and Southern regions, increasing 11.8% and 8.0% month-over-month, respectively.

In the Northeast, exceptional sales increased by 6.9% every month and in the West by 2.1%.

According to the Mortgage News Daily, the average interest rate on the popular 30-year fixed-rate mortgage was just under 3% in mid-September but was up to 3.22% by the end of October. Mortgage rates fell last Friday, however, when Omicron’s new version of the coronavirus was announced.

There are still few buyers for homebuyers, especially those in the lower segment. The total construction stock at the end of October was 1.25 million units, 0.8% less than in September and 12.0% compared to the previous year (1.42 million). Compared to the October sale, this equates to a very low 2.4-month offer. The four to six-month supply is generally seen as a balanced market between buyers and sellers.

The boom in home purchases, reflected in October sales, marks the end of a very strong year for the market. Last year’s jump began a few months after the pandemic began in the United States, and while many believed it was losing momentum, it still doesn’t seem like it.

“The spectacular victory in October guarantees that total sales of existing homes will exceed 6 million in 2021, the best performance in 15 years,” said Yun.

Sales of new homes, as measured by signed contracts, also declined in October, but that could be because large construction companies cut their sales to address supply chain problems in the construction sector.

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