U.S. home sales rose an unprecedented 24.7% in July, extending a rebound in June after the coronavirus pandemic all but froze the housing market this spring.
The National Association of Realtors said Friday that sales of existing homes jumped last month to a seasonally adjusted annual rate of 5.86 million. With consecutive months of record-breaking gains, purchases are up 8.7% from a year ago. Home sales rose 20.7% in June, a record that lasted one month.
The housing market has been one of the more resilient sectors of the economy during the pandemic, but market activity continues to hinge on supply, which was limited even before the coronavirus outbreak.
The number of available homes for sale was 1.5 million units, down 2.6% from June and 21.1% from one year ago. At the current sales pace, there is a 3.1-month supply of houses, down from 3.9 months in June and the 4.2 months from July 2019.
The dearth of home available for purchase is pushing prices higher. The median price for a home cracked the $300,000 mark for the first time ever, settling at $304,100. That up a sharp 8.5% from July 2019.
“With only 3.1 months of existing supply on the market, even with the recent pickup in the pace of homebuilding, the lack of inventory is going to continue to be a hurdle by limiting some prospective buyers’ choices and weakening their purchasing power,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.
Meanwhile, homes put up for sale are vanishing from more quickly. Homes were on the market for an average of 22 days in July, down by two days from June, and they are disappearing seven days faster than they did in the same month last year. NAR said more than two-thirds of homes sold in July were on the market for less than a month.
Sales exploded in every region in the country, led by the Northeast and West, where sales grew by more than 30%. The Midwest was close behind as sales there rose 27.5%, while sales in the South rose 19.4%.
The jump in home sales, or closings, jibe with pending home sales report from May, when signed contracts jumped a record 44.3%. That report is a barometer of finalized purchases over the next two months — in this case, the record-setting months of June and July.
Sales of both existing and new homes fell sharply during the traditional spring selling season as communities were locked down to prevent the spread of the coronavirus. But as areas have lifted restrictions and people are figuring out how to go about business under pandemic conditions, home sales have skyrocketed.