As the nation continues to struggle against COVID-19, one industry appears to be seeing surprising growth. Home sales are hot right now, and even a pandemic can’t seem to slow them down.
In the strongest monthly gain in the history of the survey, going back to 1968, sales of existing homes soared 24.7% in July from June, according to the National Association of Realtors. This represents the highest sales pace since December 2006, with sales 8.7% higher from July 2019.
Housing Supply Down
These numbers represent closed sales, meaning contracts were signed in May and June, and this was despite happening during a period where supply fell, and prices rose. Low mortgage rates likely helped boost activity as spring gave way to summer.
According to MSNBC’s Diana Olick, the supply of existing homes plummeted 21.1% annually, with just 1.5 million homes for sale at the end of July.
“This represents a 3.1-month supply at the current sales pace, down from a 4.2-month supply a year earlier. It’s the lowest July supply in the history of the inventory survey, which has been tracking single-family supply data since 1982,” she said.
“The new listings are running a little higher than one year ago, but all those new listings are being grabbed by the buyers and taken off the market,” said Lawrence Yun, chief economist for the NAR.
Median Home Price
The median price of a home in July was up 8.5% annually to $304,100, which is a record high nominal price but also the highest price when adjusted for inflation. “When adjusted, it is 3.4% higher than the bubble high set in 2006, when mortgage lending was loose and borrowers could buy a home with no down payment and little to no financial documentation,” says Olick.
As mentioned, low-interest rates are adding fuel to home prices by adding more purchasing power.
Realtor.com’s chief economist Danielle Hale adds, “Continued healing in the housing market is a positive for the overall economy, but elevated jobless claims raise concerns about how sustainable this housing demand is, especially in the face of rising prices.”
Sales of New Homes
As for newly built homes, sales jumped 14% from May to June, according to the U.S. Census, with homebuilder sentiment rising in August to the highest score in the 35-year history of the National Association of Home Builders’ monthly index. It appears builders are benefiting not just from strong buyer demand but from the severe shortage of existing homes for sale.