Sales of existing homes rose 24.7% in July compared to June, according to the National Association of Realtors. These numbers represent closed sales, which means contracts signed May and June.
This is the strongest monthly profit in the history of the survey, back to 1968, and the highest selling point since December 2006.
Sales were 8.7% higher compared to July 2019.
The increase in sales came as supply fell, prices rose and mortgage rates remained low.
The supply of existing homes fell 21.1% annually, with just 1.5 million homes for sale at the end of July. This represents an offer of 3.1 months at the current point of sale, down from an offer of 4.2 months a year ago. It is the lowest July supply in the history of the survey, dating back to the early 1980s.
“The new ads are running a bit higher than a year ago, but all those new ads are being grabbed by buyers and taken off the market,” said Lawrence Yun, chief economist for the Realtors.
That deficit pushed the median price of a home sold 8.5% annually in July to $ 304,100. This is a record high nominal price, but also the highest price when adjusted for inflation. As adjusted, it is 3.4% higher than the high tax set back in 2006. At that time, mortgage lending was very loose, and lenders could buy a home with no down payment and not much until no financial documentation.
“I think there’s a big social change in housing decisions today,” Yun said. “The bracket for higher incomes has been more stable in terms of jobs, and they are benefiting from record low mortgage rates.”
Low interest rates add fuel to house prices because they give buyers more purchasing power. Beginning mortgage spikes in early June very briefly, but then fell back sharply. The average rate on the 30-year fixed mortgage appeared just above 3% for most of June before falling below July.
“Continued recovery in the housing market is 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 for realtor.com.
Sales of newly built homes jumped 14% from May to June, according to the U.S. Census. Homebuilder sentiment rose in August to the highest score in the 35-year history of the National Association of Home Builders’ monthly index. Builders benefit not only from strong demand from buyers, but from the severe shortage of existing homes for sale.
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