Home Sales Continuous Increase
There has been talks that the rising mortgage rates will taper the real estate market. While rising rates may price out the lower end of buyers, these rates are still at historically low levels. Mortgage rates are still well below their 5-year average, which sits in the middle-4% range. Many experts argue that the real estate market will not fizzle out in the coming year, and will move up quickly due to pent up demand. Remember, many home buyers had to sit on the sidelines because of soaring home prices year-over-year. Here is why home sales will continue to rise at a record rate in 2022.
Why Home Sales Keep Going Up
One of the most important aspects of the real estate market’s historic run is the overwhelming demand we have seen. This demand has stayed steady throughout the year despite many different analysts predicting demand will fall. As we currently see, and said best by Michael Miedler, “a lot of buyers are trying to rush in and beat any more increases in the mortgage rates.” While slightly above 3% mortgage rates are not scary, they are costly. An interest rate increase by as little as .25% can lead to thousands of dollars paid across the term of a 30 year mortgage.
With existing home sales continuing to rise, and rising .8% in October, the real estate market is looking past seasonality for the second consecutive year. The annual rate of home purchases has reached 6.34 million, which signals continued growth. In fact, over the past two months, September and October, existing home sales have continued to rise at steady rates. With median home sales increasing 13.1% in a 12 month period, the supply crunch on real estate has taken charge. With home prices in Louisville, Kentucky having the median price of the home sales is $230,000. The average home sale price has reached as high as $281,000 in the year.
The Real Estate Market’s Resiliency
Home sales have proved to be consistent and the real shining industry of the economy during the pandemic. Despite the first two months of the pandemic, real estate has continued to be the biggest safe haven in the pandemic economy. After the release of the sales data on Monday, November 22, 2021, the resiliency of homes sales prove once again. Even while inventory remains at record lows, and at less than a months supply in Louisville, Kentucky, home buyers are still out there.
Home Sales In 2022 Bottom Line
With the current real estate market sentiment remaining high, there is little signs of a real estate market slowdown. While seasonality usually plays a key role in real estate, it looks like we are going to miss out on a slower holiday season again. Real estate has cooled some, as it usually does due to bank holidays, but do not be surprised to see a sales surge coming into the end of winter. Prices, inventory, and rates all will continue to make headlines for real estate in the coming months. However, do not be surprised to hear about the resilient demand as the supply constraints does not improve.