Last month in August, home prices rose to the highest peak that we’ve seen since 2007 despite a projected decrease caused by rising interest rates.  In fact, the actual impact of the rising interest rates from May to June has only just become clear.  The National Association of Realtors’ home sales report basis statistics off of closed transactions, typically contracts that were signed two months prior to the posted statistic.  Therefore, previous reports did not show the actual impact of increasing rates until recently creating a surprised stir in the market.  The expected adjusted annual rate had been approximately 5.25 million, but the actual rate was clocked at 5.39 million.  Home sales have also been higher than last year’s levels for a continuous 26 months.

The chief economist of NAR, Lawrence Yun, stated, though, that the high in the real estate market is not a long term change.

“Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions,” he said. “Tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.”

Regardless of the spike in home sales, the supply is not keeping up with the demand and a seller’s market reigns supreme.  Homes were selling above asking price in August and the median time on the market listings for all homes was a scant 43 days.  Asking price has also risen 14.7% since August 2012 creating the strongest year-over-year price gain in eight years.

Shanthi Bharatwai says that “some of the price increases can be explained by the shifting mix of homes. The share of distressed homes — foreclosures and short sales — represented just 12% of total sales, down from 23% in August 2012.”

But fear not!  It’s projected that in the upcoming months, inventory will continue to expand helping to balance out that seller’s market for our buyers out there.  But be a little wary: if interest rates continue to rise, buying may not be as appealing and prices may moderate.  As always, a local real estate agent is a dependable resource to help navigate trends in both the local and national markets and decipher whether it’s the right time for buying or selling homes.

Picture citation:  http://en.wikipedia.org/wiki/Hot_air_balloon

Article citation: Bharatwai, Shanthi.  (Septemeber 19, 2013).  Existing home sales highest level since February 2007.  The Street.  Retrieved September 25, 2013 from: http://www.thestreet.com/story/12042453/1/existing-home-sales-highest-level-since-february-2007.html.