Image: Andy Dean / Adobestock
The pandemic may have caused a decline in existing-home sales across the country over the past three months, but according to the National Association of Realtors (NAR), sales rebounded in June. What's more, every sales region in the country experienced month-over-month sales increases, with the West seeing the most improvement. If you are considering putting your home on the market, here are five reasons why you should act sooner rather than later:
People Are Looking to Move
The pandemic has forced people to spend more time in their own homes, leading many homeowners to realize that their homes no longer fit their lifestyles or their expanding families. According to Lawrence Yun, chief economist for NAR, "The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown." He expects that the market revitalization will continue but cautions that a sustained recovery will depend on mortgage rates remaining low and employment numbers continuing to improve.
Inventory Is Very Low
The housing market continues to face low inventory levels, creating ideal conditions for a seller's market. At the end of June, there were 1.57 million units available for sale, up 1.3% from May 2020 but down a staggering 18.2% from a year ago. At the current sales pace, inventory levels would supply the housing market for only 4 months, down from 4.8 months in May 2020 and 4.3 months in June 2019. Buyers who are serious about gaining a foothold in the housing market are becoming more adaptable in the face of increased competition by waiving home inspections and showing flexibility with their financing.
Demand for Homes Is High
With low inventory levels and a high demand for homes from eager buyers, many homes will be sold in record time. In June, the average property remained available for sale for only 24 days; in comparison, it took, on average, 27 days for a property to sell in June 2019. Of all the homes sold in June 2020, 62% were available for less than a month. First-time buyers accounted for 35% of all home sales in both June 2020 and June 2019. According to the NAR "2019 Profile of Home Buyers and Sellers," the annual share of first-time buyers was 33%.
Home Prices Are Up
Homeowners who choose to sell now will see record returns on their investments. Home prices, on average, increased year over year. According to Yun, the lack of inventory that has been plaguing the housing market over the past few years has led to inflated costs. "Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply," he says. Every sales region in the country recorded increases in median home prices when compared to the year before. What's more, June marked the 100th straight month of year-over-year price gains.
Mortgage Rates Are at Historic Lows
With interest rates at all-time lows, buyers can more easily afford to purchase their dream homes. According to Freddie Mac, for the week ending July 30, 2020, the average commitment rate for a 30-year, fixed-rate mortgage decreased to 2.99%; at the same time last year, it averaged 3.75%. According to Sam Khater, chief economist for Freddie Mac, "It's Groundhog Day in the mortgage market as rates continue to remain near historic lows, driving purchase demand over 20% above a year ago." He believes that home sales will remain strong throughout early fall, due to the strong demand from buyers and the moderate slowdown in home prices expected in late summer.
Regional Sales Breakdown for June 2020
Northeast: Existing-home sales annual rate of 490,000; an increase of 4.3% from May 2020 and a decrease of 27.9% from June 2019. The median sales price increased 3.6% from June 2019.
Midwest: Existing-home sales annual rate of 1.1 million; an increase of 11.1% from May 2020 but a decrease of 13.4% from June 2019. The median sales price increased 3.2% from June 2019.
South: Existing-home sales annual rate of 2.18 million; an increase of 26% from May 2020 but a decrease of 4% from June 2019. The median sales price increased 4.4% from June 2019.
West: Existing-home sales annual rate of 950,000; an increase of 31.9% from May 2020 but a decrease of 13.6% from June 2019. The median sales price increased 5.4% from June 2019.
