After three months of dipping sales, existing-home sales saw a record rebound in June, bounding 20.7% month over month to a seasonally adjusted annual rate of 4.72 million units.
That’s according to the National Association of Realtors (NAR), which also reported that sales still fell year over year, decreasing 11.3% from June 2019’s 5.32-million-unit pace. Sales still remain below pre-pandemic levels, but given the deep sales plunges posted in the existing-home market since the COVID-19 crisis took hold, the big monthly jump — the largest since 1968, when the NAR began tracking the metric — was a more than welcome turnaround.
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” said NAR chief economist Lawrence Yun. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
The record gain makes further sense when compared to the country’s recovery timeline. Existing-home sales numbers are derived from closing data, making them most accurate as a measure of homebuying activity from one or two months prior. In this case, that means that June’s figures would reflect activity from late April and May, when much of the nation was starting to reopen from the first wave of coronavirus prevention measures and eager house hunters were keen to take advantage of minuscule mortgage rates.
“[Mortgage Bankers Association] data has shown a sharp rebound in mortgage purchase applications once states started reopening in May, with activity now surpassing year-ago levels for nine straight weeks,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association (MBA). “It is thus no surprise that existing-home sales, which are recorded at closing, picked up in June to their highest level since March.”
Home prices have remained stout, with June’s median existing-home price at $295,300, up 3.5% year over year. It’s the 100th consecutive month that prices have increased annually.
Part of the price growth can be attributed to low inventory, which has only been exacerbated by the pandemic. Total housing inventory at the end of June was at 1.57 million units, up 1.3% from May but still down 18.2% from June 2019. Unsold inventory is at a supply of 4.0 months at the current sales pace, down from 4.8 months in May and 4.3 months in June last year.
“We continue to highlight the extraordinarily low level of housing inventory, both in terms of the absolute number of properties on the market, as well as months’ supply,” Fratantoni said. “Constrained supply will continue to support home prices in the months ahead, while also making it challenging for some would-be buyers to reach the market.”
The big question now is, what comes next? June’s existing-home sales data is encouraging, but doesn’t take into account the surges of COVID-19 cases seen in many parts of the country during the summer. That includes California, Texas and Florida, which collectively account for a sizeable chunk of the country’s home sales.
Couple that with expected seasonal slowdowns and the aforementioned tight inventory, and it appears that the only thing certain about the home sales picture is more uncertain times ahead.
“The coming months,” said Zillow economist Matthew Speakman, “will be a true test of the housing market’s enduring strength and resilience.