The housing market came roaring back in June, as low mortgage rates and increased economic activity helped push sales of previously owned homes up 20.7% from the prior month.
Demand was strong from 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 remained low, as the pandemic has made potential sellers cautious about letting people tour their homes.
Existing-home sales rose in June to a seasonally adjusted annual rate of 4.72 million, the biggest monthly increase in records going back to 1968, the National Association of Realtors said Wednesday. The June sales marked a 11.3% decrease from a year earlier.
Previously-owned homes make up most of the housing market.
Economists surveyed by The Wall Street Journal expected a 21% monthly increase.
“The housing market is hot, red hot,” said Lawrence Yun, NAR’s chief economist. “As we are coming out of the lockdown, we see this backlog of buyers…trying to take advantage of the record-low mortgage rates.”
The major question for market watchers is whether June’s strong sales pace is set to continue this summer, or whether home sales will slow as pent-up demand from the spring falls off and unemployment remains high.
The spring is usually the busiest season for home sales, as buyers with children want to move into new homes before the school year starts. Now the usual spring demand has been pushed to the summer, according to agents and brokers.
“We were in a strong housing market before, and we’re going back to it again,” said Jerry Howard, chief executive of the National Association of Home Builders. “Even in places where the virus is peaking, there is still interest in home buying.”
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.
Existing-home sales rose the most month-over-month in the West, at 31.9%, and in the South, at 26%, according to the NAR data.
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.
New-home sales, which make up about 10% of the market, also showed positive signs in June. 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, rose 17.3% in June from May, the Commerce Department said last week. Residential permits, which can be a bellwether for future home construction, rose 2.1%.