US Home Prices Rise by ‘Fastest Pace’ Since April
US Home Prices Rise by ‘Fastest Pace’ Since April

By Naveen Athrappully

Home prices in the United States rose on both a monthly and yearly basis last month, potentially moving up further over the coming months as interest rates remain above 6 percent, according to real estate brokerage Redfin.

In September, housing prices increased by 0.5 percent compared to August, which is the “fastest pace since April and the third consecutive month where the growth rate has increased,” the firm said in an Oct. 22 statement. On an annual basis, prices were up 6 percent from a year back. The largest monthly gain was recorded in Nassau County in New York, followed by Philadelphia and Virginia Beach.

Home prices have continued to tick up because there isn’t enough supply to meet the demand.

“There are around 20 percent fewer homes on the market today than there were five years ago, mainly because so many homeowners locked in a low mortgage rate during the pandemic,” said Redfin senior economist Sheharyar Bokhari.

“With mortgage rates back above 6.5 percent this month—and unlikely to drop below 6 percent this year—home prices will likely continue their consistent climb until more inventory comes onto the market in the spring.”

The average 30-year fixed-rate mortgage rate dropped from its yearly high of 7.22 percent in May to 6.08 percent in late September. Even though rates have now risen to 6.44 percent, they are far lower than the 7.31 percent from a year back.

With mortgage rates lower by more than a percentage point over the past year, “potential homebuyers can stand to benefit,” said Freddie Mac chief economist Sam Khater.

Amid lower rates, mortgage applications for new home purchases increased by more than 10 percent in September compared to a year ago, according to the Mortgage Bankers Association (MBA).

In addition to the lower rates, “more newly built options have been coming onto the market,” thus making it appealing for prospective buyers to purchase a home, said MBA deputy chief economist Joel Kan.

Builder Sentiment

In an environment of high home prices and elevated mortgage rates, the number of housing starts declined in September on both a monthly and yearly basis, according to data from the U.S. Census Bureau. However, the data diverged between single-unit housing and those with five or more units.

For single units, housing starts registered a positive growth. In contrast, housing starts for five or more units registered a decline.

The largest growth in single-family starts was in the Northeast, which registered a 10.6 percent monthly jump and a 77.4 percent increase from last September.

Joel Berner, an economist with Realtor.com, warned that the Northeast numbers should be “taken with a grain of salt” since the data could be affected by seasonal adjustments, according to an Oct. 18 post.

“Blips in the raw data during off-peak months of the year in regions with a high degree of seasonality, like the Northeast, can skew the adjusted figures that are primarily reported. We will be interested to see how next month’s revisions of the September data come in,” he said.

Robert Dietz, chief economist of the National Association of Home Builders (NAHB), suggested that the higher interest rates in October could negatively affect upcoming data.

Meanwhile, builder confidence improved in October despite prospective buyers facing affordability challenges, according to an Oct. 17 NAHB statement. This was the second straight month that builder sentiment ticked up.

Builders expect mortgage rates to moderate over the coming months, with inflation easing.

“While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions,” said the NAHB’s chairman, Carl Harris.

“The wild card for the outlook remains the election, and with housing policy a top tier issue for candidates, policymakers should be focused on supply-side solutions to the housing crisis.”

Dietz noted that many prospective homebuyers are still waiting for interest rates to come down. The NAHB expects mortgage rates to decline in the coming quarters, thus improving housing demand.


Discover more from USNN World News

Subscribe to get the latest posts sent to your email.

USNN World News Corporation (USNN) USNN World News is a media company consisting of a series of sites specializing in the collection, publication and distribution of public opinion information, local,...