Existing home sales jumped nearly 21% in June – a record monthly gain

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Sales of existing homes jumped nearly 21% in June from May, according to the National Association of Realtors.It was the largest monthly gain since realtors began tracking data in 1968 and came after sharp declines in the previous three months due to the coronavirus pandemic. Sales were still 11.3% lower per year.

This tally is based on closures, so it represents contracts signed at the end of April and May, before much of the national economy begins to reopen and before the latest outbreak of coronavirus cases.

“The housing market is hot, sizzling, data driven and the anecdotal prevalence of multiple offers,” said Lawrence Yun, chief economist for real estate agents. “The urban area is less hot. We are clearly seeing trends for small towns or suburbs. ”

Home sales could have been stronger if there had simply been more homes for sale. The supply of available existing homes fell 18.2% per year to just 1.57 million homes for sale at the end of June. Based on the current pace of sales, this represents a four month supply. Last June, 350,000 more homes were on the market.

“We are facing a serious shortage of inventory, especially at the lowest prices,” Yun said. “Inventory levels go down and down, which could create a bottleneck for other home sales down the road. ”

Mortgage rates are near their lowest levels in several weeks. This gives buyers more purchasing power, but also helps to keep house prices high. The median price of an existing home sold in June rose 3.5% per year to $ 295,300. This is the highest price ever.

Much of the gain is likely to come from pent-up spring demand, but there are signs that it will continue at least into the summer. Mortgage applications for the purchase of a home increased 19% per year last week, according to the Mortgage Bankers Association.

First-time buyers are also gaining in strength, representing 35% of buyers in June. This figure was as low as 30% in recent months.

“The question, however, after this pent-up demand for a backyard is met, is whether the pace of transactions matches the trend in jobs and income,” said Peter Boockvar, chief investment officer at Bleakley. Advisory Group. “In addition, the demographics of the millennium will be a huge factor of change in the years to come. ”

Regionally, sales increased 4.3% month over month in the Northeast and 11.1% in the Midwest. In the South, sales jumped 26% per month and in the West, sales jumped 31.9%.

Sales of newly built homes soared in May, in part due to the very low supply of existing homes for sale. Builders are benefiting from changing consumer wishlists, especially for more high-tech homes, homes further away from metropolitan areas, and modern floor plans offering more individual rooms for home offices and l home schooling.

There could be problems on the horizon. Yun, the chief real estate agent economist, has expressed concern about a second lockdown, as coronavirus cases rise in many parts of the country.

“The prices may not be damaged at all, but the sales could,” he said. “Virtual tours represent only 7% of buyers. “

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