Mortgage rates at record lows while home sales surge

Photo (c) ginevre - Getty Images

Sales would likely be higher if more homes were on the market

The average mortgage rate is holding steady at levels below 3%, providing plenty of incentive for homebuyers whose main challenge now is finding a home to purchase. 

The average 30-year fixed-rate mortgage is 2.87%, making even expensive homes more affordable. The rate on the 15-year fixed-rate mortgage is even lower -- $2.125%.

“Since the most recent peak in April, mortgage rates have declined nearly a quarter of a percent and have remained under three percent for the past month,” said Sam Khater, Freddie Mac’s chief economist.

Real estate broker Redfin credits continued rock-bottom lending rates with driving sales, which in turn have driven up prices. In a report, the company said the median home-sale price increased 22% year-over-year to $350,750—an all-time high.

Fewer homes on the market

The declining number of available homes has put sellers in the driver’s seat and is helping to drive up prices. In the study period, the average home sold in a record low 18 days on the market.

In its report, real estate broker RE/MAX found the supply of homes hit a record low of 1.1 months in April compared to 1.3 months in March. But despite low inventory levels, home sales in April were the highest ever for that month and marked the 10th highest month in the past 13 years.

"That's a clear reflection of overwhelming demand and the resilience of today's buyers," said Adam Contos, CEO of RE/MAX Holdings, Inc. "The 32 days on market average – a report record – is noteworthy, too. Many listings are being snapped up the day they go on sale – or within just a few days. 

Realtors report April sales this week

While both brokers’ reports are based on company listings and transactions, we’ll get a more comprehensive picture of the housing market by the end of the week when the National Association of Realtors (NAR) is scheduled to release its existing home sale report for April.

In March, home sales declined because there were not enough homes on the market. Total housing inventory at the end of March totaled 1.07 million units. That was higher than in February but down 28% from March 2020.

Over the last decade, homebuilders have added fewer-than-normal new houses and now face even more challenges to do so. The Wall Street Journal reports the price of lumber this spring is four times its normal price.

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