Total existing home sales, which included single-family home sales, townhomes, condominiums and co-ops, increased July 8 from July 2019, NAR reported.
NAR chief economist Lawrence Yun said the housing market is past the recovery phase and is now booming, with home sales exceeding pre-pandemic levels.
“Mostly house sales move within a few percentage points, but to see 20% profit is pretty surprising,” he said.
Homebuyers were happy to buy after the housing market essentially closed in the spring buying season. Interest rates in the vicinity of record lows have also kept many buyers busy, he said. And many have even looked for a lifestyle change as a result of the pandemic.
“With the huge shift in remote work, current homeowners are looking for larger homes and this will lead to a continuing level of demand, even in 2021,” Yun said.
The increase in demand, coupled with a constant low inventory of available homes, has sent the median home price in the US to $ 304,100, the highest price ever – both in nominal terms and when adjusting for inflation. The median price is 8.5% up from a year ago and marks 101 straight months of year-over-year profit.
Low inventory and record high prices
While sales numbers are a rare sunny spot for the economy, the long-term outlook for sales is a bit cloudy, said Matthew Speakman, an economist at Zillow, who noted that available housing inventory is tight and prices continue to rise.
“A severe shortage of available homes – especially at lower price points – is likely to force these recent strong improvements to fade in the coming months, especially as increased levels of economic uncertainty begin to weigh on homeowners’ enthusiasm,” he said.
Rapid appreciation of house price will also limit the number of buyers who can benefit from these otherwise rosy buying conditions, Speakman said.
Inventory of available homes was already tight a year ago. Now, with 1.5 million units available at the end of July, inventory is down 2.6% from last month and 21.1% from last year, according to the NAR report.
With only 3.1 months of existing supply on the market, according to the NAR report, even the recent pickup in the pace of home construction will not meet demand, said Mike Fratantoni, chief economist at the Association of Mortgage Bankers.
“Lack of inventory will continue to be an obstacle by limiting the choice of some potential buyers and weakening their purchasing power,” he said. “If supply signal rises in the coming months, the demand will be there for more sales.”
High-end retail outlets are seeing a resurgence
If inventory remains low and prices are high, home ownership could be further out of reach for low- and even middle-income buyers, said Robert Frick, a business economist at the Navy Federal Credit Union.
“The fact that lower-income Americans are more affected by the pandemic just makes this situation worse,” he said.
“Continued recovery in the housing market is a positive for the general economy, but increased unemployment claims have raised concerns about how sustainable this demand for housing is, especially in the face of rising prices,” said Danielle Hale, chief economist at Realtor.com.
At the lowest prices, there is so much demand and so little inventory that there has been a decrease in the number of homes sold, Yun said. He found that sales of homes under $ 100,000 in July were 10% lower than a year ago.
But for the homes in price range that were above $ 250,000, sales grew by 20% or more. Yun said the high end of the market was slow but is now active. This may be due to people moving to the suburbs and looking for a larger scale together with a home a record high stock market, Yun said.
He notes that most of the current job losses we have seen do not affect like many of the buyers of homes on higher income levels.
“On the upper income brackets, buyers are more stable and trying to take advantage of lower interest rates,” Yun said.
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