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Wednesday, July 22, 2020 - 11:00

MNI DATA REACT: Existing Home Sales Up Record 20.7% in June


By Brooke Migdon

WASHINGTON (MNI) - Home buyers flooded the U.S. market in June and sales of existing homes surged by 20.7%, the strongest single-month percent increase on records going back to 1968, according to data released Wednesday by the National Association of Realtors.

U.S. existing home sales reached a monthly sales pace of 4.72 million in June, up from an unrevised 3.91 million pace in May, though that is still down 11.3% from a year earlier.

"The housing market is hot. Red hot," NAR Chief Economist Lawrence Yun told reporters Wednesday on a conference call.

Yun said record-low mortgage rates brought buyers back to the market in June, though shrinking inventory levels could "create a tighter bottleneck for sales gains moving forward." Despite the pandemic-driven upheaval of the economy, credit conditions for buyers were roughly similar to last year, he said.

--PRICES LITTLE AFFECTED

Sales of existing homes increased in all four major regions in June, up 31.9% in the West, 26% in the South, 11.1% in the Midwest, and 4.3% in the Northeast.

Prices have been little affected by the Covid-19 pandemic, Yun said, adding he expected an even greater gain last month, which saw the median existing home price hitting an all-time high of $295,300.

Spikes in infections rates in some parts of the country pose a risk to the housing market, and a second lockdown would be "detrimental" to sales activity, Yun said, but would likely not affect prices. He added that rising mortgage rates could also derail record growth.

Yun said the NAR would be upgrading its annual forecast based on June's numbers and feedback from real estate agents and brokers who said the trade association's projection was too pessimistic on pent-up demand.

"The housing market was clearly strong before the pandemic," Yun said. "As we come out of lockdown we see this backlog of buyers."

--CONDO MARKET SUFFERS

Single-family sales shot up by 20% in June while condominium sales surged by 29%. Still, sales of condominiums, which typically make up roughly 12% of total sales, accounted for just 9% of all transactions in June. Yun said that number has been trending downward during the "pandemic months" as buyers move out of cities and into the suburbs, where prices tend to be lower and crowding is more easily avoidable.

"The home has become more than a place to live" during state lockdowns, he said, noting that in many cases, houses have turned into offices and classrooms, and potential buyers may be ranking square footage above location.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

[TOPICS: MAUDS$,M$U$$$]

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