Existing Home Sales Jump 21% as Seller Profits Rise

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The National Association of Realtors reported This Week in Real Estate that June saw a record-setting month-over-month increase of existing home sales; further supporting a “V-shaped” economic recovery. Below are a few newsworthy events from the fourth week of July that influence our business: 

Existing Home Sales Climb Record 20.7% in June. Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic, according to the National Association of Realtors. Each of the four major regions achieved month-over-month growth, with the West experiencing the greatest sales recovery. Total existing-home sales completed transactions that include single-family homes, townhomes, condominiums, and co-ops, jumped 20.7% from May to a seasonally-adjusted annual rate of 4.72 million in June. Sales overall, however, dipped year-over-year, down 11.3% from a year ago (5.32 million in June 2019). “The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” said Lawrence Yun, NAR’s chief economist. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.” The median existing-home price for all housing types in June was $295,300, up 3.5% from June 2019 ($285,400), as prices rose in every region. June’s national price increase marks 100 straight months of year-over-year gains. Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019. Properties typically remained on the market for 24 days in June, seasonally down from 26 days in May, and down from 27 days in June 2019. Sixty-two percent of homes sold in June 2020 were on the market for less than a month. Existing-home sales in the West ascended 31.9% to an annual rate of 950,000 in June, a 13.6% decline from a year ago. The median price in the West was $432,600, up 5.4% from June 2019.

U.S. Home Seller Profits Rise to 36% in Second Quarter of 2020. ATTOM Data Solutions on Thursday released its second-quarter 2020 U.S. Home Sales Report, which shows that home sellers nationwide realized a gain of $75,971 on the typical sale, up from the $66,500 in the first quarter of 2020 and from $65,250 in the second quarter of last year. The latest figure, based on median purchase and resale prices, marked yet another peak level of raw profits in the United States since the housing market began recovering from the Great Recession in 2012. The typical $75,971 home-sale profit represented a 36.3 percent return on investment compared to the original purchase price, up from 34.5 percent in the first quarter of 2020 and from 33.7 percent a year ago, to another post-Recession high. “The housing market across the United States pulled something of a high-wire act in the second quarter, surging forward despite the encroaching economic headwinds resulting from the Coronavirus pandemic. Profit margins hit new records as prices kept climbing, with few indications that the impact of the virus would topple the market,” said Todd Teta, chief product officer at ATTOM Data Solutions.  

Home Purchase Plans Have Not Significantly Changed Because of COVID-19. According to NAHB’s latest Housing Trends Report, the share of Americans who are considering the purchase of a home in the next 12 months was 11% in the second quarter of 2020, essentially flat when compared to the same quarter in 2019 (12%). In light of the COVID-19 crisis, this finding indicates that the overall propensity of Americans to want to buy a home has not been impacted by the pandemic. Similarly, the share of these prospective buyers who are first-time buyers is about the same in the second quarter of 2020 (59%) as it was a year earlier (58%).

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