The usual summer slowdown in the housing market is not happening this year. Buyers continue to show strong demand, spurred by the new stay-at-home world of the coronavirus and by record low mortgage rates.
Pending home sales, which measure signed contracts to purchase existing homes, increased 5.9% in July compared with June, according to the National Association of Realtors. Sales were 15.5% higher annually
"We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market," said Lawrence Yun, the NAR's chief economist. "Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings."
Yun said he does not expect sales to drop off in the historically slower fall season. He is predicting existing home sales to increase to a 5.8 million annualized pace in the second half of this year. That would bring the full-year total to 5.4 million, a 1.1% gain compared with 2019.
Regionally, pending home sales in the Northeast rose 25.2% for the month and were up 20.6% from a year ago. In the Midwest, sales rose 3.3% monthly and 15.4% annually.
Pending home sales in the South increased 0.9% for the month and were up 14.9% from July 2019. Sales in the West rose 6.8% monthly and 13.2% annually.
The only thing holding back even stronger sales is the shortage of homes available. Inventory at the end of July was down 21% annually, marking the lowest supply ever recorded by the NAR, since it began tracking this metric in 1982.
"Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem," Yun said. "If 20% more homes were on the market, we would have 20% more sales, because demand is that high."
Mortgage rates marked record lows in July, giving buyers additional purchasing power. Home prices, however, continue to push higher due to stiff competition in the market. The median home price in July hit a record $304,100, as measured by closed sales.
July sales of newly built homes, which are also measured by signed contracts, surged dramatically, as buyers are now looking for new, high-tech, smart homes with floor plans designed for working and schooling at home. Builders are also benefiting from the severe shortage of existing homes for sale.