U.S. existing-home sales rebounded at a record pace in June, boosted by historically low mortgage rates and showing strong signs of a market turnaround after three straight months of sales declines caused by the coronavirus pandemic. This, according to the National Association of Realtors in a report released last month.
Total existing-home sales, which include single-family, townhomes, condominiums and co-ops, jumped 20.7% from May to a seasonally adjusted annual rate of 4.72 million in June. The percentage gain was the largest since 1968 when the National Association of Realtors began tracking the series. Sales overall, however, dipped year-over year. In June of 2019 sales were at 5.32 million. This year seeing an 11.3% drop. Eighty-five percent of U.S. home sales are existing home sales.
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” said Lawrence Yun, NAR’s chief economist. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
The report also showed house prices rising to an all-time high in June with a shift toward bigger homes away from urban centers as companies offer their employees the flexibility of working remotely because of the pandemic. The median existing-home price for all housing types in June was $295,300, up 3.5% from June 2019 ($285,400), as prices rose in every region. June’s national price increase marks 100 straight months of year-over-year gains.
Significantly low inventory, according to Mr. Yun, was a problem even before the pandemic and says such circumstances can lead to inflated costs.
“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply.” Mr. Yun’s concerns are highlighted in NAR’s 2020 Member Profile in which Realtors point to low inventory as being a hurdle for potential buyers.
Houses for sale typically remained on the market for 24 days in June. Sixty-two percent of homes sold in June 2020 were on the market for less than a month. Tight supply was causing bidding wars in competitive markets.
First-time buyers were responsible for 35% of sales in June while individual investors or second-home buyers purchased 9% of homes in June. All-cash sales accounted for 16% of transactions in June. Distressed sales – foreclosures and short sales – accounted for 3% of sales in June, a 2% increase compared to June of 2019.
“It’s inspiring to see Realtors absorb the shock and unprecedented challenges of the virus-induced shutdowns and bounce back in this manner,” said NAR President Vince Malta, broker at Malta & Co. in San Francisco, Calif. “NAR and our 1.4 million members will continue to tirelessly work to facilitate our nation’s economic recovery as we all adjust to this new normal.”
Click here to read the full report from the National Association of Realtors®