fizkes / Adobestock
After four months of declines, existing-home sales rebounded in June, according to the National Association of Realtors (NAR). All four major sales regions in the country recorded double-digit year-over-year sales gains, and three regions posted month-over-month increases. According to Lawrence Yun, chief economist for NAR, the pace of home sales has climbed to a rate not seen since before the pandemic. “Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales.”
Home Inventory Up but Still Lower Than Last Year
By the end of June, there were 1.25 million units available on the housing market, an increase of 3.3% from May’s total housing inventory. In comparison, inventory was down 18.8% from the 1.54 million units available at this same time last year. At the current sales pace, unsold inventory would supply the market for 2.6 months, up from a 2.5-month supply in May but down from a 3.9-month supply in June 2020.
Price Increases Expected to Slow
With inventory levels remaining low, home prices are not expected to decline. June’s median existing-home price climbed 23.4% year over year, marking the second highest level recorded by NAR since January 1999. Every sales region in the country reported price gains. What’s more, home prices have been increasing year over year for the past 112 consecutive months. However, Yun predicts that prices will climb at a much slower pace toward the end of 2021. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new home construction become available.” The average property remained available for sale for only 17 days in June, unchanged from a month earlier but a decrease of 24 days from a year earlier. Of all the homes sold in June, 89% remained on the market for less than a month.
Who Are the Buyers?
First-time buyers represented 31% of all homebuyers in June, unchanged from a month earlier but down from 35% in June 2020. According to Yun, this group of buyers has been facing some overwhelming hurdles: “Huge wealth gains from both housing equity and the stock market have nudged up all-cash transactions, but first-time buyers who need mortgage financing are being uniquely challenged with record-high home prices and low inventory.” Individual investors and second-home buyers—two groups who account for the majority of all-cash sales—purchased 14% of all the homes sold in June. This is down from 17% in May but up from 9% from a year earlier. All-cash transactions, meanwhile, represented 23% of all sales, unchanged from a month earlier but up from 16% of sales recorded in June 2020.
Northeast - Existing-home sales annual rate of 740,000; an increase of 2.8% from May 2021 and 45.1% from June 2020. At $412,800, the median sales price increased 23.6% from June 2020.
Midwest - Existing-home sales annual rate of 1.33 million; an increase of 3.1% from May 2021 and 18.8% from June 2020. At $278,700, the median sales price increased 18.5% from June 2020.
South - Existing-home sales annual rate of 2.59 million; unchanged from May 2020 but an increase of 19.4% from June 2020. At $311,600, the median sales price increased 21.4% from June 2020.
West - Existing-home sales annual rate of 1.2 million; an increase of 1.7% from May 2021 and 23.7% from June 2020. At $507,000, the median sales price increased 17.6% from June 2020.