WASHINGTON (August 23, 2021) – Existing-home sales rose in July, marking two consecutive months of increases, according to the National Association of Realtors®. Three of the four major U.S. regions recorded modest month-over-month gains, and the fourth remained level.
New-home sales also increased, signaling that soaring home prices haven’t discouraged buyers who are migrating to the suburbs and hinterlands as more work from home in the new gig economy. We have seen digital workers migrating from their offices in Seattle and other major cities to smaller towns in the Midwest and New England to live in more comfortable surroundings, thanks to the Internet.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering existing-home sales in all nine U.S. census divisions, reported a 16.6 percent annual gain in May, up from 14.8 percent in the previous month.
The median existing-home price tallied by the NAR for all housing types in July was $359,900, up 17.8 percent from July 2020 ($305,600), which differs from Case-Shiller because CS uses a 3-month trailing average to make it more statistically valid. Each region saw prices climb. This marks 113 straight months of year-over-year gains, say the Realtors.
Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 2.0 percent from June to a seasonally adjusted annual rate of 5.99 million in July. Sales inched up year-over-year, increasing 1.5 percent from a year ago (5.90 million in July 2020).
"We see inventory beginning to tick up, which will lessen the intensity of multiple offers," said Lawrence Yun, NAR's chief economist. "Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren't seeing as much growth because there are still too few starter homes available."
The months of supply increased in July to 6.2 months from 6.0 months in June, with inventories returning to normal levels. The all-time high was 12.1 months of supply in January 2009. The all-time low was 3.5 months, most recently in October 2020.
There is still not enough housing to meet soaring demand. Total existing-home housing inventory at the end of July totaled 1.32 million units, up 7.3 percent from June's supply and down 12.0 percent from one year ago (1.50 million). Unsold inventory sits at a 2.6-month supply at the present sales pace, up slightly from the 2.5-month figure recorded in June but down from 3.1 months in July 2020, a historic low.
The housing market is so hot that individual investors or second-home buyers, who account for many cash sales, purchased 15 percent of homes in July. All-cash sales accounted for 23 percent of transactions in July, and up from 16 percent in July 2020.
But first-time buyers purchased just 30 percent of existing sales, which means the rest of the young adults leaving school and/or their parents may find rental housing to be a more viable option for the foreseeable future. How long is that—who knows?
Harlan Green © 2021
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