Existing-Home Sales Increased For Third Straight Month in August

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Existing-home sales increased for a third consecutive month in August, rising 2.4% compared with July to a seasonally-adjusted annual rate of 6 million, according to the National Association of Realtors (NAR).

Year-over-year, existing-home sales were up 10.5% compared with August 2019 – this despite the economic impact of the COVID-19 crisis.

Regionally, and month-over-month, existing-home sales increased 13.8% in the Northeast, 1.4% in the Midwest, 0.8% in the South and 0.8% in the West.

Existing-home sales probably would have been even stronger in August were it not for the ongoing lack of inventory. Record-low interest rates, flattening home prices and pent-up demand continue to be the primary factors driving increased sales – however, there simply are not enough homes available on the market to meet overall demand, which has never been stronger due to the COVID-19 crisis and the trend of families moving out of urban areas.

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” says Lawrence Yun, chief economist for NAR, in a statement. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around three percent and with continued job recovery.”

The median existing-home price for all housing types in August was $310,600, up 11.4% from $278,800 in August 2019.

Housing inventory at the end of August totaled 1.49 million units, down 0.7% from July and down 18.6% from one year ago. That’s about a three-month supply at the current sales pace.

Adding to the inventory problem is rising lumber prices and a dearth of lumber resulting from the California wildfires, both of which are now impacting new home construction.

“Over recent months, we have seen lumber prices surge dramatically,” Yun says. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”

Yun says the need for housing will continue to grow, especially in areas that are attractive to those who can work from home.

As highlighted in NAR’s August study, the 2020 Work From Home Counties report, remote work opportunities are likely to become a growing part of the nation’s workforce culture.

Yun believes this reality will endure, even after a coronavirus vaccine is available.

“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” he says. “To assure broad gains in homeownership, more new homes need to be constructed.”

Properties typically remained on the market for 22 days in August, flat compared with July but  down significantly from 31 days in August 2019.

Sixty-nine percent of homes sold in August 2020 were on the market for less than a month.

Distressed sales – foreclosures and short sales – represented less than 1% of sales in August, equal to July’s percentage, but down from 2% in August 2019.

“The past few months have shown how valuable real estate is in the country, both to our nation’s economy and to individuals who have been given an opportunity to rethink their location and redesign their lifestyle,” says Vince Malta, president of NAR. “NAR maintains robust advocacy efforts on behalf of our 1.4 million Realtors – including hundreds of thousands of housing providers – to ensure this industry can continue to lead in America’s economic recovery.”

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