New home sales spiked nationwide and in the Spokane area in September as buyers tried to avoid bidding wars while trying to secure mortgages before interest rate hikes made borrowing more expensive.
According to the U.S. Department of Commerce, the number of new home sales increased 14% nationwide compared to August. At the local level, the increase was 9.4%, according to Rob Higgins, executive officer of the Spokane Association of Realtors.
“There’s no doubt that when interest rates are going to go up and people are on the fence, they want to get off the fence and find a house,” Higgins said. “A lower interest rate enables them to buy more homes.”
Higgins said the average price of a new home increased by about $ 90,000 from about $ 357,000 in September 2020 to $ 445,000 for the 83 new homes sold last month.
“There’s not a lot of inventory in this price range,” said Higgins. âInstead of getting into a bidding war for prices, I’ll go out and buy a new house if I can. Then I don’t have to worry that the bid will be increased. “
The Commerce Department reported Tuesday that sales of new single-family homes rose to a seasonally adjusted annual rate of 800,000 units last month, well above economists’ expectations.
The sales pace in September was the fastest in the US since sales hit an annualized rate of 873,000 in March.
Nationally, the average price of a new home, where half the homes sold for more and half for less, rose to a record $ 408,800 in September, up 9.5% year over year.
In Spokane, Higgins said the average price for a new home for the entire year was about $ 436,000.
Prices are being driven up by strong demand and by building owners struggling with bottlenecks in critical building materials such as sawn timber.
“We expect new home sales to move mostly sideways for the remainder of 2021 as strong demand and low mortgage rates are dampened by high prices and backlog,” said Nancy Vanden Houten of Oxford Economics.
In the Spokane area, the local market has struggled with very low inventory levels as sales increased.
Higgins said the latest survey found 617 properties for sale, which is a 24-day listing. That means it would take a little over three weeks to sell all 617 homes in the market, he said.
As a result of this tight market, many homebuyers are willing to enter into contracts to build houses with the confidence of knowing that they will find the home they want, he said.
âWhen you sign a contract with a contractor, there may be price adjustments, but you do,â said Higgins. “Again, we’re talking about mid-$ 400,000 new build in this price range.”
The Associated Press contributed to this report