With existing-home sales continuing their upward trajectory, many economists believe that the housing market is well past the recovery phase. Lawrence Yun, the chief economist for the National Association of Realtors (NAR), believes the market is in a boom phase, with home sales comparable to pre-pandemic levels. "With the sizeable shift in remote work," he says, "current homeowners are looking for larger homes, and this will lead to a secondary level of demand even into 2021."
Homes Sold in Record Time
The increase in demand from buyers was evident in the amount of time properties remained on the market. The average property was available for sale for only 22 days in July, down from 24 days in June and 29 days a year ago. Of all the homes sold in July, 68% were available for less than a month. The short time from "for sale" to "sold" is evidence of the housing shortage that continues to plague the market. By the end of July, total housing inventory declined 2.6% from a month earlier and a staggering 21.1% from a year earlier. At the current sales pace, unsold inventory would supply the market for only 3.1 months, down from 3.9 months in June and 4.2 months in July 2019. According to Yun, this lack of inventory will impact sales. "The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition. More homes need to be built."
Property Prices Climb
The lack of inventory is leading to an increase in home prices. In its latest data release for metro home prices, NAR recorded that in 2020's second quarter median single-family home prices increased in 96% of measured markets when compared to a year earlier. Median prices climbed 8.5% year over year. What's more, every sales region in the country recorded price gains. Home prices have seen year-over-year increases for the past 101 consecutive months; July's price increase marked the first time median home prices climbed above the $300,000 level.
Regional Sales Breakdown for July 2020
Every sales region in the country reported double-digit, month-over-month increases. Only the Northeast saw a decline in year-over-year sales. Median home prices climbed in every region when compared to July 2019 data.
Northeast: Existing-home sales annual rate of 640,000; an increase of 30.6% from June 2020, but a decrease of 5.9% from July 2019. The median sales price ($317,800) increased 4% from July 2019.
Midwest: Existing-home sales annual rate of 1.39 million; an increase of 27.5% from June 2020 and 10.3% from July 2019. The median sales price ($244,500) increased 8% from July 2019.
South: Existing-home sales annual rate of 2.59 million; an increase of 19.4% from June 2020 and 12.6% from July 2019. The median sales price ($268,500) increased 9.9% from July 2019. West: Existing-home annual rate of 1.24 million; an increase of 30.5% from June 2020 and 7.8% from July 2019. The median price ($453,800) increased 1.3% from July 2019.