NAR: Existing-Home Sales Hit Highest Level Since Dec. 2006
U.S. home sales rose for the third straight month in Aug. – up 2.4% compared to July – as historically low interest rates overshadowed many pandemic fears.
WASHINGTON – Existing-home sales continued to climb in August, marking three consecutive months of positive sales gains, according to the National Association of Realtors® (NAR). Each of the four major U.S. regions saw both month-over-month and year-over-year growth, with the Northeast seeing the greatest improvement from the prior month.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – rose 2.4% from July to a seasonally-adjusted annual rate of 6.00 million in August. Sales as a whole rose year-over-year, up 10.5% from a year ago (5.43 million in August 2019).
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” says Lawrence Yun, NAR’s chief economist. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and continued job recovery.”
The median existing-home price for all housing types in August was $310,600, up 11.4% from August 2019 ($278,800). August’s national price increase marks 102 straight months of year-over-year gains.
Total housing inventory at the end of August totaled 1.49 million units, a 0.7% drop from July and down 18.6% from one year ago (1.83 million). Unsold inventory sits at a 3.0-months' supply at the current sales pace, down from 3.1 months in July and down from the 4.0 months one year ago.
Scarce inventory has been problematic for the past few years, an issue Yun says has worsened in the past month due to the dramatic surge in lumber prices and the dearth of lumber resulting from California wildfires.
“Over recent months, we have seen lumber prices surge dramatically,” Yun says. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
Yun says the nation’s need for housing will grow even more, especially in areas that are attractive to people who can work from home. A study released by NAR in August, the 2020 Work From Home Counties report, found remote work opportunities to likely become a growing part of the nation’s workforce culture. Yun believes this will continue even after a coronavirus vaccine is available.
“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” Yun says. “To assure broad gains in homeownership, more new homes need to be constructed.”
August home sale details
Properties typically remained on the market for 22 days in August, seasonally equal to the number of days in July and down from 31 days in August 2019. Two out of three homes (69%) sold in August were on the market for less than a month.
One in three August sales went to first-time buyers (33%), down from 34% in July 2020 but up from 31% in August 2019.
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of the homes in August, up slightly from July’s 15% and unchanged year-to-year. All-cash sales accounted for 18% of transactions in August, up from 16% in July 2020 and down from 19% in August 2019.
While the recession has caused some concern about a future uptick in foreclosures, distressed sales – foreclosures and short sales – represented less than 1% of sales in August, unchanged from July but down from 2% in August 2019.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.94% in August, down from 3.02% in July. The average commitment rate across all of 2019 was 3.94%.
Single-family and condo/co-op sales: Single-family home sales sat at a seasonally-adjusted annual rate of 5.37 million in August, up 1.7% from 5.28 million in July, and up 11.0% from one year ago. The median existing single-family home price was $315,000 in August, up 11.7% from August 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 630,000 units in August, up 8.6% from July and up 6.8% from one year ago. The median existing condo price was $273,300 in August, an increase of 7.8% from a year ago.
Regional breakdown: For three straight months, home sales have climbed in every region month-to-month. Median home prices grew at double-digit rates in each of the four major regions year-to-year.
August 2020 saw sales in the Northeast jump 13.8% at an annual rate of 740,000, a 5.7% increase from a year ago. The median price in the Northeast was $349,500, up 10.4% from August 2019.
Existing-home sales increased 1.4% in the Midwest to an annual rate of 1,410,000 in August, up 9.3% from a year ago. The median price in the Midwest was $246,300, a 10.7% increase year-to-year.
Existing-home sales in the South rose 0.8% to an annual rate of 2.60 million in August, up 13.0% from the same time one year ago. The median price in the South was $269,200, a 12.3% year-to-year increase.
Existing-home sales in the West inched up 0.8% to an annual rate of 1,250,000 in August, a 9.6% increase from a year ago. The median price in the West was $456,100, up 11.8% from August 2019.
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