Looking for the latest evidence of the housing market’s strength throughout the coronavirus crisis? Consider July’s existing-home sales numbers, confirming the sector’s muscle with another month of stellar sales gains.
Total existing-home sales leapt a record 24.7% from June to July, reaching a seasonally adjusted annual rate of 5.86 million units, according to the National Association of Realtors (NAR). July’s historic jump improved upon the previous high set just one month prior, when sales vaulted 20.7% from May to June.
Year over year, sales grew 8.7% from July’s 2019’s annualized rate of 5.39 million units. July’s sales pace is the fastest since December 2006.
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
Sales are sharply on the upswing among all property types. Single-family homes, which suffered after in-person showings were mostly shuttered through the spring, bounced back 19.3% in June and another 23.9% in July; the annualized pace for such properties is now at 5.28 million units, slightly ahead of the annual rate seen in February.
Condos and co-ops, though, are all seeing a resurgence. Sales of condos and co-ops had plummeted 43% from February to May, sinking to a modern-era low pace of 340,000 units, according to the Wells Fargo Securities Economics Group. Since, however, sales have rebounded, jumping 29.4% in June and another 31.8% in July to get back near February’s selling rate.
With the market running so hot, the downside of short inventory keeps rearing its ugly head, Yun said. Total housing inventory at the end of July is at 1.50 million units, down 2.6% from June and 21.1% from July last year. Unsold inventory is at a 3.1-month supply at a current sales pace, down from 3.9 months in June and 4.2 months in July 2019.
“The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition,” said Yun. “More homes need to be built.”
“With only 3.1 months of existing supply on the market, even with the recent pickup in the pace of homebuilding, the lack of inventory is going to continue to be a hurdle by limiting some prospective buyers’ choices and weakening their purchasing power,” added Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association (MBA).
“If supply meaningfully picks up in the months ahead, the demand will be there for more sales. MBA is still forecasting for purchase originations to climb 5 percent this year to $1.34 trillion – a high not seen since 2006 ($1.40 trillion).”
The “critical lack” of inventory is driving faster price growth, Fratantoni noted. The median price for existing homes in July was $304,100, up 8.5% year over year. July’s annual price increase makes for 101 consecutive months with year-over-year gains, as national median home prices rose above $300,000 for the first time ever.