- Existing home sales rose by 20.7% M-M in June to a seasonally adjusted annual rate of 4.72-M That is the largest monthly increase on record, although the seasonally adjusted annual rate of existing home sales is still 18% lower than where it stood in February.
- The Key takeaway from the report is that inventory of existing homes is still tight. That is a pressure point that feeds higher prices, but it is also a factor that will bolster the prospects for new home demand.
- The FHFA Housing Price Index showed a revised 0.1% increase in June from -0.2%.
- The weekly MBA Mortgage Applications Index increased 4.1% following a 5.1% increase in the previous week.
US home sales increased by the most on record in June, boosted by historically low mortgage rates, but the outlook for the housing market is being clouded by low inventory and high unemployment amid the C-19 coronavirus chaos
The report from the National Association of Realtors (NAR) Wednesday, which showed house prices rising to an all-time high last month, confirmed a shift toward bigger homes and properties away from urban centers as companies allow employees flexibility to work from home because of the virus.
Existing home sales rose 20.7% to a seasonally adjusted annual rate of 4.72-M units last month. The percentage gainer was the largest since Y 1968 when the NAR started tracking the series. Data for May was unrevised at a 3.91-M unit pace, the lowest level since October 2010.
June’s increase ended 3 straight months of decreases, though home resales remained below their pre-C-19 chaos mark.
Existing home sales, which make up about 85% of US home sales, fell 11.3% on a Y-Y basis in June.
The 30-yr fixed mortgage rate is at an average of 2.98%, the lowest since Y 1971, according to data from mortgage finance agency Freddie Mac. Data last week showed homebuilding increased in June by the most in nearly 4 yrs.
In my discussion with economist Bruce WD Barren, he said: “The real question at hand can this demand for existing homes be sustained in 2021 and can it help in the recovery of new home sales despite the fact that lender criteria has been tightened materially by some financial institutions. This has been caused in part due to the leniency in foreclosures and the pandemic.
“My answer is probably yes. This has been good news by existing homeowners which is allowing them more time to sell their home. According to ATTOM Data Solutions, one of the most trusted curators of the nation’s premier property database and 1st property data provider of Data-as-a-Service (DaaS), is that it now takes 841 days to foreclose on a home, compared to 713 days in 2017 in part persuading financial institutions that it is not in their best interests for quick foreclosures.”
Mr. Barren added: “The longer it takes, the better the chances one gains in trying to save the equity in their home and not inadvertently punishing their credit,. Other important statistics show the current foreclosures in America Stats is 1 in 2,767 properties with Bank repossessions down by 33% compared to last year, one positive note arising from the pandemic. Further, demand for existing homes should continue through year-end and into 2021 where the National Association of Realtors expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000. According to Lawrence Yun, NAR’s chief economist, in 2021, sales are predicted to rise to 5.35 million units for existing homes and 800,000 for new homes.“
A separate report Wednesday from the Mortgage Bankers Association showed applications for loans to purchase a home increased 2% last week from a week earlier.
Have a healthy day, Keep the Faith!