Surprisingly, Home Sales Surge in September

Buyers grabbed cheap mortgage rates while they still could, economists say

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It turns out September was a good month to sell a house, as buyers lined up to take advantage of low mortgage rates while they last.

Sales of existing homes rose 7% to their highest level since January, the National Association of Realtors said in its monthly housing report Thursday. That came as a surprise to economists who had been expecting high prices and low inventories to dampen sales more than they actually did. 

Low mortgage rates helped fuel the increase, economists said, as relatively cheap borrowing costs at least temporarily gained the upper hand in their tug-of-war against steadily rising home prices in the minds of buyers. Not only that, but some buyers might have decided to get while the getting is good, since those rates have been rising away from the record lows they hit last winter. It didn’t hurt that the job market was also picking up. 

Another factor helping sales along was that more homes came on the market in the preceding few months, although buyers are still finding a very limited selection. The housing supply slipped to 2.4 months in September from 2.6 in August, but until that point had risen or stayed flat all year. That’s compared to a six-month supply that’s typically associated with “moderate” price increases, according to the association. 

Economists took the report as an indication that home sales will continue to do well, as long as there is actually something to buy, even amid pessimistic predictions about the broader economy’s slowing recovery from the pandemic.

“September's surge in existing home sales is reassuring,” economists at Wells Fargo said in a commentary. “Housing was one of the first sectors to signal that the broader economy was slowing. That slowing appears to have been driven by the lack of supply, and sales perked up when more homes came on the market.”

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