The recent bump in home sales are a sign of U.S. consumers' resilience despite a darkening outlook for growth. Cheaper borrowing costs have improved affordability for buyers, making them more eager to buy despite rising prices amid a shortage of properties for sale.
"Consumers seem to still be confident in their finances, and are clearly feeling good enough to make large purchases such as buying a home," said John Pataky, executive vice president at TIAA Bank. "The prolonged period of low mortgage rates has helped pull buyers off the sidelines by making home purchases a more affordable proposition."
The median sales price climbed 4.7% from a year ago to $278,200, outpacing average wage gains. Homebuyers have been a beneficiary from the recent economic uncertainty, as interest rates have fallen in response to slower global growth and President Donald Trump's tariffs against China.
The 30-year mortgage rate averaged 3.73% this week, down from 4.65% a year ago, according to mortgage buyer Freddie Mac. Still, the upside is limited by a decline in sales listings. There were 1.86 million properties for sale at the end of August, down 2.6% from a year ago.
The inventory crunch appears to be most pronounced in starter homes priced below $250,000, the kinds of properties that are generally affordable for first-time buyers. Sales of homes worth less than $250,000 have fallen in the past year, while sales of home priced between $250,000 and $1 million have risen.