Existing-home sales set a record in July for a month-over-month increase as July sales were up 25% over June sales according to the National Association of Realtors This Week in Real Estate. In addition, home builder confidence has reached its highest reading in the 35-year history of the Housing Market Index, matching the record set in December 1998. Below are a few newsworthy events from the third week of August that influence our business:
U.S. Home Sales And Median Price Soar to a Record in July. Existing-home sales jumped 25% in July from June, beating the prior record gain of 21% set a month earlier, as low mortgage rates fueled demand for real estate. Sales of single-family homes, townhomes, condominiums, and co-ops rose to a seasonally adjusted 5.86 million, the highest level since 2006, the National Association of Realtors said in a report on Friday. The median price increased 8.5% from a year ago to $304,100, breaking through the $300,000 threshold for the first time. “The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.” Properties remained on the market for an average of 22 days in July, down from 29 days in July 2019, the NAR report said. About 68% of homes sold in July 2020 were on the market for less than a month.
New Home Starts in U.S. Spike 22 Percent in July. According to the U.S. Housing and Urban Development and Commerce Department, in a further sign, that housing continues to boost the economy, single-family and multifamily starts each posted solid gains in July 2020, with total housing production up 22.6 percent to a seasonally adjusted annual rate of 1.50 million units. This is the highest production rate since February 2020. The July 2020 reading of 1.50 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 8.2 percent to a 940,000 seasonally adjusted annual rate. “Strong builder confidence and heavy buyer traffic point to further production gains in the near term, but the more than 110 percent jump in lumber prices since mid-April is adding approximately $14,000 to the cost of each new single-family home,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). Overall permits increased 18.8 percent to a 1.50 million unit annualized rate in July. Single-family permits increased 17.0 percent to a 983,000 unit rate. Multifamily permits increased 22.5 percent to a 512,000 pace.
Builder Confidence in U.S. Ties All-Time High in August. According to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released this week, U.S. homebuilder confidence in the market for newly-built single-family homes increased six points to 78 in August 2020. The HMI now stands at its highest reading in the 35-year history of the series, matching the record that was set in December 1998. “Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” said NAHB Chief Economist Robert Dietz. “Single-family construction is benefiting from low-interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs, and rural markets as renters and buyers seek out more affordable lower density markets.” All the HMI indices posted gains in August. The HMI index gauging current sales conditions rose six points to 84, the component measuring sales expectations in the next six months increased three points to 78 and the measure charting traffic of prospective buyers posted an eight-point gain to reach its highest level ever at 65. Looking at the three-month moving averages for regional HMI scores, the Northeast jumped 20 points to 65, the Midwest increased 13 points to 63, the South rose 12 points to 71 and the West increased 15 points to 78.