A real estate agent, right, shows potential buyers a property in Newport Beach, California.
Jamie Rector | Bloomberg | fake pictures
Existing home sales increased nearly 21% in June compared to May, according to the National Association of Realtors.
It was the biggest monthly gain since Real Estate Agents began tracking the data in 1968 and came after sharp declines in the past three months due to the coronavirus pandemic. Sales were still 11.3% lower annually.
This count is based on closings, thus representing contracts signed in late April and May, before much of the national economy began to reopen and before the most recent increase in coronavirus cases.
“The housing market is red hot, based on the data and anecdotal prevalence of multiple offerings,” said Lawrence Yun, chief economist at Realtors. “The urban area is less hot. We are clearly seeing trends for smaller cities or suburbs.” “
Home sales could have been more robust if there had simply been more homes for sale. The supply of available existing homes fell a remarkable 18.2% annually to just 1.57 million homes for sale at the end of June. At current sales rates, that represents a four-month supply. Last June, 350,000 more houses were on the market.
“We are facing severe inventory shortages, especially at the lower price points,” Yun said. “Inventory levels are shrinking and shrinking, which could create a bottleneck for future home sales later.”
Mortgage rates are close to record lows and have been for several weeks. That is giving buyers more purchasing power, but it also helps keep house prices high. The median price of an existing home sold in June increased 3.5% annually to $ 295,300. That is the highest recorded price.
Much of the profit is likely to come from accumulated spring demand, but there are indications that it will continue at least through the summer. Mortgage applications to buy a home increased 19% annually last week alone, according to the Association of Mortgage Bankers.
First-time buyers are also gaining strength, accounting for 35% of June buyers. That figure had been as low as 30% in recent months.
“The question, however, after this pent-up demand for a backyard is satiated, is whether the pace of transactions stabilizes along with the trend of jobs and earnings,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. . “Also, the millennial demographics will be a big deciding factor in the years to come.”
Regionally, sales increased 4.3% month-over-month in the Northeast and were 11.1% higher in the Midwest. In the south, sales increased by 26% per month, and in the west sales increased by 31.9%.
Sales of newly built homes soared in May, thanks in part to the very low supply of existing homes for sale. Builders are benefiting from the modification of consumer wish lists, particularly for more high-tech homes, homes farther from metropolitan areas, and modern floor plans offering more individual rooms for home offices and education. In the home.
There could be problems on the horizon. Yun, the chief economist for real estate agents, said he is concerned about a second shutdown as coronavirus cases are on the rise in many parts of the country.
“Prices may not be damaged at all, but sales may be,” he said. “Virtual visits only represent 7% of buyers.”
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