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Last updated on February 3rd, 2021 at 11:21 am
Sustaining the strength of the housing market, low mortgage rates, and demand for space in the suburbs had increased the sales of previously owned homes in August. In turn, boosting the economy.
According to the National Association of Realtors data issued on Tuesday – compared to the previous month closing transactions increased 2.4% to a 6 million annualized rate, the strongest pace since the end of 2006.
The figure matched the median estimate in a Bloomberg survey of economists. Prices jumped 11.4% from a year earlier on an unadjusted basis to a record.
While the increase in existing-home sales in August was smaller than the record 24.7% jump a month earlier, the level is consistent and steadily growing.
The housing sector has been one of the strongest parts of the economic rebound, one because of ultra-low mortgage rates, and two cooped-up urbanites looking for homes and yards outside of the city during the pandemic.
Lawrence Yun, NAR’s chief economist, said on a call with reporters. “I do expect a further increase in sales for the remainder of the year. There’s plenty of buyers in the pipeline.”
Last month there were 1.49 million existing homes for sale, down 18.6% from August 2019, the 15th straight year-over-year decline. The inventory of houses would last three months at the current sales pace.
The NAR said Properties remained on the market for an average of 22 days in August. Sixty-nine percent of homes sold in August were on the market for less than a month. Anything below five months is seen as a tight market.
The median home price which was $278,800 a year earlier increased to $310,600 last month. The annual gain was the fastest since 2013.
“The imbalance of supply and demand will hurt affordability soon,” so builders need to step up construction, Yun said. “The homeownership rate may decline if prices rise too fast. That’s why it’s critical to have the supply.”
According to last week’s data of the Commerce Department, builders in August began work on the newest single-family homes since February.
The figure also reflected a decline in the tropical storm-hit South, though a rise in permit signals the region will see a pickup in construction in the coming months.
Existing-home sales increased in all regions. Sales in the South, the largest U.S. region, rose to the highest since May 2006.
Purchases in the West were strongest in six months and Northeast sales were the best in three years. Midwest sales climbed to the highest level since the end of 2006.
According to the NAR data, purchases of previously owned single-family homes rose 1.7%, while sales of condominiums increased 8.6% from a month earlier.
Previously owned home sales account for roughly 90% of U.S. transactions and are calculated when a contract closes.
