A house for sale is seen in Santa Monica, California.
Lucy Nicholson | Reuters
After a record-breaking July, the housing market is still showing no signs of cooling.
Sales of existing homes increased by 2.4% to a seasonally adjusted annual rate of 6 million units, according to the National Association of Realtors. Sales were 1
Sales were hampered only by a lack of supply. There were 1.49 million homes for sale at the end of August, a decrease of 18.6% per year to a 3.0-month delivery. The supply of homes for sale when sales were last so robust, in 2006, was more than twice as much as the current supply.
The tight supply pushed the median price of an existing home, which was sold in August, to a record high of $ 310,600. That is 11.4% up annually. During the third quarter of this year, housing wealth will increase by $ 1.5 trillion from the second quarter.
“The imbalance between supply and demand will soon hurt value. When it comes up, it will hinder condominiums,” said Lawrence Yun, chief economist for real estate.
Tough competition means that the market is moving very fast. It only took 22 days to sell a house in August and matched the fastest on the record.
Mortgage rates set several record lows in August, which only contributed to the fierce competition for housing. Low prices also kept house prices warm, as they give buyers extra purchasing power.
Regionally, sales were strongest in the northeastern part and increased by 13.8% from month to month. Sales were 1.4% higher in the Midwest and 0.8% higher in both the South and West. The Northeast saw some of the strictest shutdown rules early in the pandemic, so the recovery can now compensate for that.
Sales of newly built homes, which are counted by signed contracts, not closures, increased by 36% annually in July. Builders benefit from the dense supply of existing homes for sale, as well as for the new consumer demand for high-tech housing in suburban and rural areas.
Strong demand is expected to continue during the usually slower autumn months, but there may be a short reduction in the number due to various natural disasters across the country.
“In early September, the new housing supply was affected by forest fires and hurricanes, and sales activity weakened. But as the effects of natural disasters have been more supply-oriented than demand-driven, prices are expected to remain high,” said Danielle Hale, chief economist at Realtor.com. “The combination of high prices and low supply will continue to make a home more difficult than it already is.”