U.S. Existing-Home Sales Continued to Climb in August -- Update
By Will Parker
Home sales rose in August for the third consecutive month,
fueled by robust demand for luxury homes and a pickup in Northeast
sales that kept the housing market hot.
Sales of previously owned homes rose 2.4% from a month earlier
to a seasonally adjusted annual rate of 6 million, the National
Association of Realtors said Tuesday. That built on a 24.7% surge
in July home sales, which was the strongest monthly gain ever
recorded, going back to 1968.
Home buyers have returned in force since late spring, when
lockdowns related to the coronavirus pandemic eased, open houses
resumed and ultralow mortgage rates helped spur sales. With many
Americans working from home, buyers are seeking more space and
accelerating plans to leave crowded cities for the suburbs or for
more rural areas, real estate agents say. Other home buyers have
moved to live closer to family members.
Economists and housing experts expect sales to stay strong
through the end of the year. The Federal Reserve has signaled it
expects to hold rates near zero for at least three more years, and
mortgage rates are also expected to stay low. Many companies have
indicated that large numbers of Americans will continue working
from home even after a coronavirus vaccine is developed, which
could continue to boost home purchases.
"Sales volume could begin to taper in late 2020, but given
current conditions, it's unlikely to diminish too much," said
Matthew Speakman, economist at Zillow.
That is good news for the U.S. economy, which has struggled
during the pandemic. The housing market has been one of the few
signs of strength, and home sales can also help when consumers
spend more on home goods and renovations.
On an annual basis, sales rose 10.5% in August, putting this
summer's housing market well ahead of last year's sales levels. The
boom in sales was most pronounced at the upper end of the market.
Sales of homes priced at more than $1 million rose 44% nationally
and were up 63.1% in the South.
"The luxury housing sector is just simply taking off," said
Lawrence Yun, chief economist of NAR.
Larger and more expensive homes are in demand as wealthier
buyers seek as much room as possible to work from home and in case
their children have remote learning this school year. Because home
prices have continued to rise during the pandemic, some existing
homeowners are taking advantage by selling at a profit and putting
the equity directly into bigger and more expensive houses, said
Odeta Kushi, deputy chief economist at First American Financial
Sales were strongest in the Northeast region during August,
increasing 13.8%. That was followed by the Midwest, where total
sales rose just 1.4%. The pickup in parts of the Northeast
reflected pent-up buyer demand after pandemic-related restrictions
began easing in some markets.
Mortgage rates are also near historic lows. As of Sept. 17, the
average interest rate on a 30-year fixed rate mortgage was 2.87%,
according to Freddie Mac.
The dearth of lower-cost homes available for sale continues to
push up prices, making it difficult for first-time home buyers with
more modest incomes to enter the market. The median sales price of
an existing home in August was $310,600, 11.4% higher than in the
same month last year.
The lower-priced part of the housing market didn't enjoy the
same price gains. Sales of homes priced for less than $100,000 fell
more than 20% compared with a year ago, according to NAR. And sales
of homes priced $100,000 to $250,000 fell 8.9%. Inventory is
shrinking for most price points, but this was especially a problem
for lower-price homes. "The lower the price point the greater
decline in inventory," Mr. Yun said.
As in July, homes sold at an unusually fast pace in August. The
average number of days a home sat on the market before selling was
22, down from 31 a year ago.
News Corp., owner of The Wall Street Journal, operates
Realtor.com under license from the National Association of
Write to Will Parker at firstname.lastname@example.org
(END) Dow Jones Newswires
September 22, 2020 14:23 ET (18:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.