U.S. home sales increased for the second straight month in July and home prices also hit a record as low-interest rates increased the demand for homes even if the coronavirus pandemic put millions of people out of work.
According to the National Association of Realtors, existing-home sales rose by 24.7% to a seasonally adjusted annual rate of 5.86 million units last month. Data for June was revised slightly to a 4.70 million-unit pace from the originally reported 4.72 million.
July’s rise was the second consecutive increase, followed soon after a monthly increase in June, and raised the sales pace above the 5.76 million pace in February before the pandemic caused a momentary drop in sales. July’s level was the highest since December 2006.
“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. “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.”
Economists surveyed by Reuters had projected sales rising 14.7% to a rate of 5.38 million units in July.
Existing home sales, which make up about 85% of U.S. home sales, increased 8.7% on a year-on-year basis in July.
The 30-year fixed mortgage rate is at an average of 2.99%, hovering near levels last seen in the early 1970s, according to data from mortgage finance agency Freddie Mac. Data earlier this week showed homebuilding surge by the most in nearly four years in July.
Housing has been a bright spot in the economy even as other sectors suffer amid widespread coronavirus infections that have slowed commerce and kept unemployment high. More than 28 million people were collecting jobless benefits at the end of July.
The pandemic steered the economy into recession in February, ending a record-long expansion that had brought U.S. unemployment to a 50-year low.
Home sales rose in all four regions in June.
There were 1.5 million previously owned homes on the market in July, down 21.1% from a year ago. The median existing house price increased 8.5% from a year ago to a record of $304,100 in July.
At July’s sales pace, it would take 3.1 months to exhaust the current inventory, down from 4.2 months a year ago. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
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