- Sophia Kearney-Lederman, an economist at FTN Financial
US existing home sales surged to the highest level this year in September, adding to further evidence the housing market is gradually recovering. According to the National Association of Realtors, sales of previously-owned homes rose 2.4% to an annual rate of 5.17 million units, overshooting analysts' expectations for a 5.10 million unit pace and following a decline in August to 5.05 million units. Nevertheless, despite the latest progress, the market continues to underperform. Sales remained 1.7% lower than in September last year. Housing is slowly getting back on track after activity stalled in the second half of last year after a run-up in mortgage rates. While activity in the property market continues to be subdued due to sluggish wage growth, a recent drop in mortgage rates should help bolster sales.
The 30-year mortgage rate declined to 3.97% last week from 4.12% in the week ended 9 October, according to Freddie Mac. The drop reflected a sharp fall in U.S. Treasury debt yields as traders pushed back expectations for the first Fed's interest rate increase in light of worrisome economic news from abroad and a big sell-off in global stock markets. In the meantime, home prices continue to rise. The average sale price for a home last month stood at $209,700, up 5.6% from the previous year. Prices have risen year-on-year for 31 straight months.
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