Homebuyers Rush to Lock in Rates, Existing-Home Sales Up 1.9 Percent in November

From Staff Reports

With supply chain issues plaguing home builders and rates forecasted to increase throughout 2022, more buyers than ever rushed to the market to buy an existing home. The statistics, which come from the November existing home sales report from the National Association of Realtors, show that existing home sales increased by 1.9 percent from October to November 2021, but greater competition over a very limited inventory of homes has pushed the median sales price for an existing home up 13.9 percent from last year.

“Determined buyers were able to land housing before mortgage rates rise further in the coming months,” said Lawrence Yun, NAR’s chief economist. “Locking in a constant and firm mortgage payment motivated many consumers who grew weary of escalating rents over the last year.”

Rent < Mortgage

Speaking of escalating rents, Apartment Guide just released a report showing just how high rents for one- and two-bedroom apartments have increased in the past 12 months. From November 2020 to November 2021, nationwide rent prices for both one-bedroom and two-bedroom apartments are up 21.3 percent and 16.7 percent, respectively. In Dallas, the average monthly rent for a one-bedroom apartment was $1,757, up 18.2 percent year-over-year. In Fort Worth, a one-bedroom apartment will set you back $1,238 a month, an increase of 4.71 percent from November 2020.

If that sounds like a mortgage payment to you, you’re not the only one. Approximately 26 percent of all sales went to first-time buyers, though. That’s down from 29 percent in October of this year and from 32 percent in November 2020.

Rates on The Rise

Of course, mortgage rates are likely headed up next year in a big way, so it’s no coincident that more buyers skipped the usual holiday lull and dove headfirst into the market to lock in low rates.

“Mortgage rates are projected to jump in 2022,” Yun affirmed, “however, I don’t expect the imminent increase to be overly dramatic.”

Yun forecasts the 30-year fixed mortgage rate to average at 3.7 percent by year-end of 2022.

New Home Construction Plagued by Shortages

While many people looked to find a new home, building material shortages on top of pricey lumber and labor scarcity wreaked havoc on home builders in 2021.

“Supply-chain disruptions for building new homes and labor shortages have hindered bringing more inventory to the market,” said Yun. “Therefore, housing prices continue to march higher due to the near-record-low supply levels.”

With 2021 drawing to a close, there is a lot to celebrate and a lot to work on, said Leslie Rouda Smith, NAR President and associate broker Dave Perry-Miller Real Estate.

“As the year comes to an end, NAR is very proud of the work we’ve done to protect homeownership and the valuable investments made in our communities and infrastructure,” Rouda Smith said. “We recognize that further efforts are needed and will continue to promote Fair Housing, work to increase the housing shortage, and fight to dismantle discriminatory housing laws and outdated policies.”