Sales of new homes spiked nationally and in the Spokane area in September as buyers sought to avoid bidding wars while trying to lock in mortgages before interest rate increases make borrowing more expensive.
The number of newly-built homes sold jumped 14% nationally compared to August, according to the U.S. Commerce Department. Locally, the increase was 9.4%, according to Rob Higgins, executive officer for the Spokane Association of Realtors.
“There’s no doubt that if interest rates are projected to increase, and people are on the fence, they are going to want to get off the fence and find a house,” Higgins said. “A lower interest rate makes it possible for them to buy more house.”
Higgins said the median price of a new home has jumped about $90,000 from about $357,000 in September 2020 to $445,000 for the 83 new homes sold last month.
“In that price range, there is not a lot of inventory out there,” Higgins said. “Rather than get into a bidding war on prices, I’m going to go out and buy a new house, if I can. Then, I don’t have to worry about getting bid up.”
The Commerce Department reported Tuesday that sales of new single-family homes increased to a seasonally adjusted annual rate of 800,000 units last month, which was well above what economists had been expecting.
The September sales pace was the strongest in the U.S. since sales reached an annual rate of 873,000 in March.
Nationally, the median price of a new home, the point where half the homes sold for more and half for less, increased to a record $408,800 in September, up 9.5% from a year ago.
In Spokane, Higgins said the median price of a new home for the entire year has been about $436,000.
Prices are being pushed higher by strong demand and by builders who are grappling with shortages of critical building supplies such as lumber.
“We expect new-home sales to move mostly sideways over the rest of 2021 as strong demand and low mortgage rates are tempered by high prices and construction backlogs,” said Nancy Vanden Houten of Oxford Economics.
In the Spokane region, the local market has struggled with very low inventory as sales have increased.
Higgins said the latest survey showed 617 properties for sale, which represented a 24-day supply. That means it would take a little over three weeks for all 617 homes on the market to sell, he said.
As a result of that tight market, many homebuyers are willing to enter contracts to build homes because of the certainty of finding the home they want, he said.
“If you sign a contract with a builder, there might be some price adjustments, but you are doing that,” Higgins said. “Again, we are talking in that price range, new construction in the mid-$400,000s.”
The Associated Press contributed to this report
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