Despite a slowly recovering economy thanks to the coronavirus pandemic, the housing market remains particularly strong. New data from the National Association of Realtors (NAR) reported a record rise in existing-home sales between June and July in the U.S.
The NAR defines existing-home sales as completed transactions that include single-family homes, townhomes, condominiums, and co-ops, total sales of which jumped 24.7 percent from June to July. That figure surpasses last month’s sales, which were the previous record at 20.7 percent, and puts market sales up 8.7 percent from last year.
Existing-home sales increased everywhere month-over-month and year-over-year except for the Northeast, where the NAR reported a year-over-year decline.
“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.”
During the pandemic, interest rates on mortgages have been considerably low. Coupled with a lack of supply and rise in demand, prices for homes have risen 8.4 percent since last year, averaging $304,100.
“The new listings are running a little higher than one year ago, but all those new listings are being grabbed by the buyers and taken off the market,” said Yun.
The rise comes at a time when overall mortgage delinquencies are falling. However, the rate of delinquency among homeowners far behind on their payments is climbing, which could be a troubling sign for the housing market.
“The good news is that overall delinquencies are trending downward and, in fact, the number of newly delinquent homeowners has fallen far below pre-pandemic levels,” Andy Walden, Black Knight economist and director of market research, told the Washington Post. “However, while this indicates that the inflow of new COVID-19-related delinquencies has subsided, the number of homeowners who have missed three or more payments is now at a 10-year high.”
In the rental market, evictions could see a sharp rise as state and federal eviction moratoriums come to an end. Whether there are significant ripple effects from the rental market to the mortgage and housing market remains to be seen.
Still, consumer confidence in the housing market is strong, with the share of renters saying it’s an excellent time to buy a home at its highest level in five years.
First-time homebuyers made up 34 percent of sales in July, which has helped drive the economy despite contraction due to the pandemic.
“Homebuyers’ eagerness to secure housing has helped rejuvenate our nation’s economy despite incredibly difficult circumstances,” said NAR President Vince Malta. “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.”