After shutdowns earlier this year, existing home sales have been climbing since May, bringing more momentum to the home buying recovery. June sales increased 20.7% according to the latest report from the National Association of Realtors. Increases in June occurred across every region in the country, with the West leading at just under 32% growth. The pace in June was 6.9% above June 2019, bringing the sales rate to its highest level in 13 years.
The Commerce Department said on Friday new home sales rose 13.8% to a seasonally adjusted annual rate of 776,000 units last month. New home sales are counted at the signing of a contract, making them a leading housing market indicator.
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown. This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
– Lawrence Yun
Chief economist at the National Association of Realtors
Low Supply & High Demand Keep Prices Rising
Inventory decreased slightly in June from a 4.8-month supply in May to a 4.0-month supply in June. Increases in COVID-19 cases within states that have high level of real estate activity, such as Texas, Florida, and California, are expected to keep inventory tighter with fewer homes going on the market in these locations. Meanwhile, there is no shortage of buyers ready to move, driven by low mortgage rates and a desire to leave the larger urban centers in exchange for more living space and greater separation between neighbors.
Attempting to keep up with demand, builders have increased construction activity, growing 17% between May and June, according to the Commerce Department. The Northeast region saw the highest increase at 117%. Earlier in the year, construction activity fell to its lowest level in 5 years after a 30% drop in April.
In NAR’s report, Yun added “Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply.” Existing home prices rose in every region in June, marking 100 straight months of national year-over-year gains.