Home Sales Move Upward in July 2020

26 Aug

According to the National Association of Realtors, existing home sales continued their strong upward trajectory in July. This makes it two months in a row that have shown significant gains in home sales. Four of the major regions managed a double-digit month over month increase while the Northeast was the only region that showed a year over year decline. 

According to the data, total existing home sales rose 24.7 percent from June to a seasonally adjusted annual rate of 5.86 million in July. The previous monthly increase in sales was 20.7 percent in June. As a whole, sales have risen 8.7 percent year over year from a year ago.

“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist in a recent press release.  “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

A few important statistics

According to the press release, the median price for an existing home for all housing types in July was $304,100 which is up 8.5 percent from July 2019 ($280,400). July’s price increase marks the 101th straight month of year-over-year gains. This is the first time ever, national median home prices went above the $300,000 level.

Total housing inventory hit 1.50 million units at the end of July, this is down 2.6% from 

June and 21.1% from one year ago (1.90 million). Unsold inventory sits at a 3.1-month supply at the current sales pace which is down from 3.9 months in June and 4.2-months in July 2019.

“The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition,” said Yun in the press release. “More homes need to be built.”

It is taking less time to sell a property as well. In July, properties typically remained on the market for 22 days which is down from 24 days in June and from 29 days in July 2019. A whopping sixty-eight percent of homes sold in July 2020 were on the market for less than a month.

First time buyers make up roughly a third of all sales, 34% of sales in July were with first time buyers which is down from 35% in June 2020 and up from 32% in July 2019. Investors and second home buyers bought 15% of homes in July, up from 9% in June 2020. 

“Homebuyers’ eagerness to secure housing has helped rejuvenate our nation’s economy despite incredibly difficult circumstances,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “Admittedly, we have a way to go toward full recovery, but I have faith in our communities, the real estate industry and in NAR’s 1.4 million members, and I know collectively we will continue to mount an impressive recovery.”

Low interest rates are most likely helping drive the sales boom. According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped to 3.02% in July, down from 3.16% in June. 

Single-family and Condo/Co-op Sales

Single-family home sales are cranking with a seasonally-adjusted annual rate of 5.28 million in July, up 23.9% from 4.26 million in June, and up 9.8% from one year ago. 

Existing condominium and co-op sales are also headed up as well. They recorded a seasonally adjusted annual rate of 580,000 units in July, which is up 31.8% from June. The median existing condo price was $270,100 in July, which is an increase of 6.4% from a year ago.

“Luxury homes in the suburbs are attracting buyers after having lagged the broader market for the past couple of years,” Yun said in the press release. “Single-family homes are continuing to outperform condominium units, suggesting a preference shift for a larger home, including an extra room for a home office.”

Regional Breakdown of home sales

This is the second consecutive month that sales increased in every region and median home prices spiked up in each of the four major regions from one year ago.

Northeast: Existing home sales in the Northeast jumped up an astounding 30.6%. This translates into an annual rate of 640,000 sales. However, this represents a 5.9% decrease from a year ago. The median price in the Northeast was $317,800 which is up 4.0% from July 2019.

Midwest: Existing-home sales jumped up 27.5% in the Midwest which resulted in an annual rate of 1,390,000 sales through July. This is an increase of 10.3% from a year ago. The median price in the Midwest was $244,500, which translates into an 8.0% increase from July 2019.

South: Existing-home sales in the South skyrocketed 19.4% to an annual rate of 2.59 million sales in July. This is an increase of 12.6% from a year ago. The median price in the South was $268,500, a which represents a 9.9% increase from a year ago.

West: Existing-home sales in the West went up 30.5% to an annual rate of 1,240,000 in July which is a 7.8% increase from a year ago. The median price in the West was $453,800, up 11.3% from July 2019.

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