Existing Home Sales Surge Most On Record But Still Down From Last Year

Mish

Existing home sales rose a 20.7% in June but sales are down 11.3% from a year ago.

The National Association of Realtors reports Existing-Home Sales Climb Record 20.7% in June.

Key Points

  1. 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.
  2. 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.
  3. 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.

By Region

  • Northeast: Sales rose 4.3%, at an annual rate of 490,000, a 27.9% decrease from a year ago. The median price was $332,900, up 3.6% from June 2019.
  • Midwest: Sales rose 11.1% at an annual rate of 1,100,000, down 13.4% from a year ago. The median price was $236,900, a 3.2% increase from June 2019.
  • West: Sales rose 31.9% at an annual rate of 950,000, a 13.6% decline from a year ago. The median price was $432,600, up 5.4% from June 2019.
  • South: Sales rose 26.0% at an annual rate of 2.18 million, down 4.0% from a year ago. The median price in the South was $258,500, a 4.4% increase from June 2019.

Impact of Fed's Actions on Financial Assets

Once again we see the impact of the Fed's actions in financial assets while most of the real economy languishes. 

Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply,” said Lawrence Yun, NAR chief economist.

Unprecedented Recession Synchronization 

Yesterday, I commented "Inflation is easy to find. Look no further than the stock and bond markets. ... The Fed can print money and Congress can hand it out, but neither can dictate where the money goes."

But inflation is not where the Fed wants it. Add housing to the list. 

Home prices are not even in the CPI. They should be.

For related excellent comments from Lacy Hunt, one of the world's biggest bond fund managers, please see Unprecedented Recession Synchronization and What it Means.

Mish

Comments (19)
No. 1-9
Tony Bennett
Tony Bennett

"but sales are down 11.3% from a year ago."

...

Despite 30yr mortgage dropping from 3.8% ish to 3.0% ish year over year.

Tony Bennett
Tony Bennett

Of course, it would be too much to expect Yun to reflect on what is happening in the rental market that might be driving sales ... especially NYC.

CNBC headline a week ago:

"Empty Manhattan apartments reach record levels, landlords slash rent"

PecuniaNonOlet
PecuniaNonOlet

I have a retired family member that was flipping houses. He would buy old run down houses in rural areas about 1 or 2 hours away from the city and fix them up. He paid between 80k to 100k for them. The local rural real estate agent laughed at him because they thought he would never recover 40k to 60k invested in fixing them up -“these are people of limited means” was the response from real estate agent.

My family member got the last laugh because he got a CITY real estate agent and was marketing/selling the houses to newly minted “work from home” professionals for 200k to 300k looking to escape city or buying a second secluded home. He sold out. I asked if i could invest or join and he said cv19 killed his idea, run down houses are selling at too high a price now. He will wait and see if opportunities arise.

I imagine the rural real estate agent is kicking himself for not seeing the market or possibilities. He lost out on the flip, commission and more business from city dwellers because of his myopic views - sound familiar?

IA Hawkeye in SoCal
IA Hawkeye in SoCal

Urban homes like West L.A., high rises like Koreatown and Manhattan NYC are in trouble. Suburban SFR's like San Bernardino County, and smaller states like Idaho are going to be future benefactors. Pro tip: watch places like Cheyenne WY for desirability. Didn't Mish move to the St George UT area? That too.

Ted R
Ted R

Good point. Statistics depend on how they are interpreted. Everytime.

Casual_Observer
Casual_Observer

Opinion: The feared jumbo mortgage debacle is here — thanks to the coronavirus — and ready to pound the housing market

Tony Bennett
Tony Bennett

The lull ending?

....

"The share of loans in forbearance dropped to its lowest level in over two months, driven by an increase in the pace of exits as more homeowners have been able to get back to work," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "The decline in the forbearance share was broad based, with decreases for GSE, Ginnie Mae, and portfolio/PLS loans."

Added Fratantoni, "Almost half of borrowers remaining in forbearance are now in an extension of the original term, while the remainder are in their initial forbearance plan. The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month.

Call center volume related to forbearances did pick up, as a percent of servicing portfolio volume (#), those calls increased from 7.8 percent to 8.3 percent. Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained flat relative to the prior week at 0.13 percent.

Jojo
Jojo

In all the articles today on this, I don't seem to see anyone offering another possibility - that people who lost their jobs or anticipate losing their businesses are being forced to liquidate their homes. There has to be some of this going on. The question is how much?

Six000mileyear
Six000mileyear

The small bounce in the northeast can be explained by stringent stay-at-home executive orders. June was the reopening, so the northeast may have much better July/August numbers compared to the rest of the country.


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