Home sales rose by 24.7% in July from June, according to the National Association of Realtors. This is the highest monthly gain in the history of the survey.
The figures also reflect the highest sales pace since December 2006. Sales was reportedly 8.7% higher from July 2019. The numbers account for closed sales, meaning contracts sealed in May and June.
The rise in home sales took place as supply dropped, prices increased, and mortgage rates remained low.
The supply of existing homes fell 21.1% annually, with just 1.5 million homes for sale at the end of July. This is equivalent to a 3.1-month supply at the current sales pace, a decline from a 4.2-month supply a year earlier.
“The new listings are running a little higher than one year ago but all those new listings are being grabbed by the buyers and taken off the market,” said Lawrence Yun, chief economist for the Realtors.
“I think there is a big societal change concerning housing decisions today,” said Yun. “The upper income bracket has been more stable in terms of jobs, and they are taking advantage of record low mortgage rates.”
Low interest rates also help home prices look attractive, as they allow consumers to gain more purchasing power. Mortgage rates increased briefly at the start of June but then dropped back quickly. The average rate on the 30-year fixed mortgage remained at around 3% for most of June before then dropping below that in July.
“Continued healing in the housing market is a positive for the overall economy, but elevated jobless claims raise concerns about how sustainable this housing demand is, especially in the face of rising prices,” said Danielle Hale, chief economist for realtor.com.
Moreover, sales of newly built homes rose by 14% from May to June, according to the US Census. Homebuilder sentiment soared in August to the highest score in the 35-year history of the National Association of Home Builders’ monthly index. Builders thrive not only due to strong buyer demand but also from the shortage of existing homes for sale.
Home mortgage application
Home mortgage application had a 4.1% increase as the month of July was ending, according to the Mortgage Bankers Association.
There has been an increase in the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less increased to 3.20% from 3.19%. Meanwhile, points, including origination fee, rose to 0.35 from 0.33 for loans with a 20% down payment.
“Mortgage applications increased last week despite mixed results from the various rates tracked in MBA’s survey,” said Joel Kan, an economist for the trade group. “The average 30-year fixed rate mortgage rose slightly to 3.20%, but some creditworthy borrowers are being offered rates even below 3%.”
This propelled the refinance application volume by 5% for the week and an increase of 122% compared with the same week one year ago, based on the ’s seasonally adjusted index data.
Moreover, the average on the 30-year fixed remained 88 basis points higher; 3.19%, where it was two weeks ago, was considered a record low.
Fannie Mae chief economist Doug Duncan said that around 60% of all outstanding loan balances have at least a half-percentage point incentive to refinance.
Data showed that consumers now get used to buying properties they have online seen online through virtual tours.
