America’s housing market staged a historic rally in June, with sales of existing homes surging 20.7 percent month-over-month, the biggest such increase on record.
The National Association of Realtors (NAR) said in a report on Wednesday that existing-home sales climbed to a seasonally adjusted annual rate of 4.72 million units last month, up from 3.91 million units in May, ending three straight months of declines.
“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.
Fueled by historically low mortgage rates and seeming to shrug off concerns about record-high unemployment amid the pandemic-ravaged economy, the surge in existing home sales represents the biggest gain since 1968 when the NAR started tracking the series.
“This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue,” Yun said.
Labor market data has shown steady improvement overall, with the number of new weekly unemployment claims falling from week to week from their April peak. Still, a resurgence of COVID-19 cases is chipping at the budding recovery, keeping over 32 million Americans on unemployment benefits and stalling the job recovery in states seeing a spike in cases.
While the recent surge in infections has sapped consumer sentiment more broadly, with the University of Michigan consumer sentiment index falling from 78.1 in June to 73.2 in July, the pandemic has not had much of an impact on prospective homebuyers. The most recent housing trends report (pdf) from the National Association of Home Builders shows that the percentage of Americans considering buying a home in the next 12 months remains essentially unchanged in the second quarter of 2020, at 11 percent, compared to the same quarter last year, at 12 percent.
“In light of the COVID-19 crisis, this finding indicates that the overall number of Americans who want to buy a home has not been impacted by the pandemic,” the Association concluded in its report.
The 30-year fixed mortgage rate is at an average of 2.98 percent, the lowest since 1971, data from mortgage finance agency Freddie Mac indicates. Data last week showed homebuilding increased in June by the most in nearly four years amid reports of a growing demand for housing in suburbs and rural areas as more people shift to work-from-home arrangements amid the pandemic.
“Home building is coming back at a steady, if unspectacular pace,” said Robert Frick, corporate economist at Navy Federal Credit Union. “The numbers also verify that many people are leaving, or planning to leave, big cities as telecommuting becomes the norm for many businesses.”