The National Association of Realtors released August data on existing US home sales, and there’s good news for anyone hoping to sell: The number of sales was up 2.4% over July—the third consecutive monthly increase—and are at their highest level since December 2006.
This year has been a particularly tumultuous one for home sales. As Covid-19 and associated lockdowns wreaked havoc on the global economy, the number of homes sold in the US plummeted in April and May to rates not seen since the 2008 recession.
The rebound is being led by mortgage interest rates, which hit an all-time low in August. Although millions of Americans were unemployed, those with money saw it as a good time to buy a home. “I was very surprised at the speed and pace of the recovery,” says Gay Cororaton, the director of housing and commercial research for the National Association of Realtors. “Right now the housing market is one of the strong legs of the economy.”
Though existing home sales are a sign that the economy is recovering, they also suggest the recovery isn’t happening evenly. In August (pdf), homes under $250,000 made up about 40% of all home sales, but sales of homes over $250,000 saw more growth over last year. The biggest change was in homes $1 million and up, which saw 44% growth over the year prior.
Cororaton says those disparities are starting to even out, and while she doesn’t expect mortgage rates to rise anytime in the next year, home sales could slow if supply doesn’t catch up with demand. A lot depends on the pandemic’s progression, which will impact both new construction (lumber prices are high right now), and the comfort levels of existing homeowners.
“The housing market right now is being propped up by low mortgage rates and job recovery, but in the long term it depends on increasing supply, which in part depends on the confidence of people to open and list their homes, and how lumber prices will move in the future,” Cororaton says.
The US housing market is a seller’s paradise, but only at the high end The British Journal Editors and Wire Services/ Quartz.