Like opening the basement door in a horror movie to investigate a mysterious loud crash, we’ve been slowly creaking that door open with COVID to find out what awaits us with the housing market. As it turns out, there is so far, nothing to fear and July has certainly solidified that notion for us.
According to the National Association of Realtors (NAR), sales of existing homes soared to a record 24.7% in July from June. This is the largest one month jump ever and comes off the heels of a strong previous report of 20%. It’s also interesting to note that first-time homebuyers made up 35% of sales!
Furthermore, the median price of a home sold rose 8.5% annually to $304,100. This is another record for the books, as it is the highest price when adjusted for inflation. In fact, it is 3.4% higher than the 2006 bubble, when adjusted.
What’s one of the biggest drivers behind these historic records? Low. Mortgage. Rates.
Low mortgage rates, as always, give buyers more purchasing power. The average rate on the 30-year fixed mortgage hovered just above 3% for most of June before falling below that in July.
According to Lawrence Yun, Chief Economist at NAR, “The housing market is well past the recovery phase and is now booming with higher home sales compared to pre-pandemic days.”
As we’ve talked about before, the Case-Shiller Home Price Index, considered the “gold standard” for appreciation, showed that nationally there was a 4.3% annual gain in June. The 20-city index, which we’ve also pointed out in past newsletters as a prime indicator, rose 3.5% year over year. Both are very strong appreciation figures.
Another big indicator is New Home Sales, which measures signed contracts on new homes. That was up 14% in July, which was much strong than expected. Sales are now up 36% year over year.
Movie theaters may not be back and running yet, but the housing market is no horror show during the pandemic. If anything, it continues to be the longest running blockbuster of the economy.