Americans bought homes in October at the fastest pace in nearly decade, helped out by low mortgage rates that have started to climb following the presidential election of Donald Trump.
As The Associated Press reports, the National Association of Realtors says sales of existing homes rose 2% to a seasonally adjusted annual rate of 5.6 million. Sales reached their strongest pace since February 2007, a sign that the market is still healing from the collapsing prices and foreclosures that ignited the 2008 financial crisis.
A stable job market and historically cheap borrowing costs have spurred demand from homebuyers this year. But sales growth has been tempered somewhat by accelerating prices and a shortage of properties on the market. Sales gains could possibly slow in the coming months as rising mortgage rates are making home loans more expensive.
“Clearly, the market continues to underestimate just how much demand for homes is out there, even in the face of tight inventory and rising existing home prices that are now the highest on record,” says Svenja Gudell, chief economist at real estate firm Zillow.
Falling mortgage rates helped boost sales for much of the year, but rates surged following this month’s presidential election. The increase means that yearly debt payments for a median-priced home would increase by more than $500 on average for people attempting to buy homes in November and December.
The rising interest rates also trickled into the housing market, with the average 30-year, fixed-rate mortgage climbing to nearly 4% from less than 3.5% at the end of October.
