Sales rose to seasonally adjusted annual rate of 4.72 million, with the biggest monthly increase in records going back to 1968.
A sluggish U.S. housing market is staging a recovery amid the pandemic, shaking off high unemployment and a rising number of infections as buyers with pent-up demand seize on record-low mortgage rates.
Sales of previously owned homes rose 20.7% in June over the prior month to a seasonally adjusted annual rate of 4.72 million, according to data from the National Association of Realtors released Wednesday, the biggest monthly increase on record going back to 1968. The rise in home sales follows other recent bullish indicators such as rising new-home sales, robust home-builder activity and a flood of mortgage applications.
Driving home sales are apartment renters seeking more space, young families moving to the suburbs, and wealthy city dwellers looking for second homes, brokers and economists say. At the same time, the supply of houses for sale remains low, with the pandemic making potential sellers cautious about letting people tour their homes.
“The housing market is hot, red hot,” said Lawrence Yun, chief economist for NAR, an industry trade group. “As we are coming out of the lockdown, we see this backlog of buyers…trying to take advantage of the record-low mortgage
Even with the jump in home sales, monthly activity remains well below levels typically seen before the spring lockdowns. June sales marked an 11.3% decrease from a year earlier. Many potential buyers remain on the sidelines, concerned about job security or the health risks related to visiting homes. Sales of previously owned homes, which make up the vast majority of U.S. housing stock, were particularly strong last month in the West and South. Mr. Yun said activity was higher in small towns and suburbs than in urban centers. Compared with a year earlier, sales increased for homes between $250,000 and $500,000, while declining for lower-priced and higher-priced homes.
Rising home sales could boost the economy, as home builders ramp up construction and new homeowners splurge on furniture and renovations. But a resurgence in Covid-19 cases and continued high unemployment could weigh on homebuying demand in the coming months. The housing market typically accounts for between 15% and 18% of the U.S. economy, according to the National Association of Home Builders.
Home sales had been in a two-year rut headed into 2020, weighed down by perennially tight supply and historically high home prices. Even solid U.S. economic growth and low unemployment couldn’t get sales moving.
The housing market showed signs of finally busting out when activity surged at the start of the year. February existing-homes sales hit their highest monthly pace in 13 years. But they hit a wall a few weeks later after widespread lockdowns kept buyers indoors, prevented real-estate agents from showing homes in some places, and prompted some sellers to pull their houses off the
Now, the major question is whether June’s strong sales pace can continue this summer, or if home sales will slow as pent-up demand falls off and unemployment remains high. In the first week of July, about one-fourth of American adults missed their latest mortgage or rent payment or had little confidence they can make the next payment on time, according to a Census Bureau survey.
Some agents and brokers are optimistic that the usual spring demand has been pushed to the summer, and that momentum is building. The spring is typically the busiest season for home sales, as buyers with children want to move into new homes before the school year starts. “We were in a strong housing market before, and we’re going back to it again,” said Jerry Howard, chief executive of the NAHB. “Even in places where the virus is peaking, there is still interest in home buying.” Other housing indicators also suggest a more bullish mood emerging. A measure of U.S. home-builder confidence rose in July to pre-pandemic levels, the NAHB said last week. Housing starts, a measure of U.S. home-building, also rose 17.3% in June from May, the Commerce Department said last week. Pending new-home sales rose to a record in June, Meyers Research said on Wednesday.
For Liz Morrison and David Mahaffey, the attraction of low-interest rates outweighed concerns about the pandemic.
The couple started touring homes in May and closed on their first house in Plano, Texas, in June. “It did feel scary. You never know when something’s going to go wrong,” said Ms. Morrison, who is 27 years old. “But I really was attracted to the low-interest rate to save money over time.”
The average rate on a 30-year fixed-rate mortgage fell to 2.98% last week, the lowest level on record, said mortgage-finance giant Freddie Mac. Mortgage applications for home purchases rose 19% from a year earlier in the week ended July 17, the ninth straight week of year-over-year increases, according to the Mortgage Bankers Association’s seasonally adjusted index. Daniel and Lauren Packer shopped for a house in Los Angeles last year but couldn’t find anything in their budget that they wanted. This spring, prices hadn’t gone down, but interest rates had, Mr. Packer said. “We could afford more,” he said.
The Packers had their offer on a three-bedroom house accepted last month. “There’s a lot of uncertainty, but for us, the timing seems to be OK,” Mr. Packer said. “We’re both excited and terrified at the same time.” The median existing-home price rose 3.5% from a year earlier to $295,300, NAR said. There were 1.57 million homes for sale at the end of June, up 1.3% from May and down 18.2% from June 2019. At the current sales pace, there was a 4.0-month supply of homes on the market at the end of June.
REPORTS ON THE ECONOMY
✅ U.S. Jobless Claims Held Nearly Steady at 1.3 Million in July 11 Week July 16, 2020
✅ U.S. Industrial Production Picked Up Again in June July 15, 2020
✅ U.S. June Consumer Prices Rose Sharply July 14, 2020
Homes typically go under contract a month or two before the contract closes, so the June data largely reflects purchase decisions made in April or May. Economists warn that growing coronavirus outbreaks in some parts of the country could slow the market’s gains. Some buyers from New York and California are delaying their trips to Miami to shop for homes due to concerns about the state’s rising case count, said Danny Hertzberg, an agent with Coldwell Banker Realty.
“It felt like we were gaining momentum week after week, month after month, and
all of a sudden there’s a little bit of a pause,” Mr. Hertzberg said.
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