By JOSH BOAK AP Economics Writer
BALTIMORE (AP) — Americans stepped up their home purchases in June by a robust 20.7% after the pandemic had caused sales to crater in the prior three months. But the housing market could struggle to rebound further in the face of the resurgent viral outbreak and a shrinking supply of homes for sale.
Sales of existing homes rose last month to a seasonally adjusted annual rate of 4.72 million, the National Association of Realtors said Wednesday. Despite the sharp gain, purchases are still down 11.3% from a year ago, when homes had sold at an annual pace of 5.32 million. And Lawerence Yun, the Realtors’ chief economist, noted that sales remain roughly 20% below their pre-pandemic levels.
At the same time, housing has managed to avoid a deeper slump from the severe recession caused by the coronavirus. Demand has remained strong among buyers who have managed to weather the downturn, while record-low mortgage rates have helped sustain affordability.
Even so, the number of property listings has plunged 18.2% from a year ago to 1.57 million. It’s the 13th straight month of shrinking supply on an annual basis. The shortage of homes makes it unlikely that the housing industry can significantly boost the overall economy.
“Buyers are out in force, but new listings remain the key to housing’s recovery,” said Danielle Hale, chief economist at Realtor.com. “More sellers are needed before we’ll see year over year gains in home sales.”
Home buyers typically purchase new furniture and fix up older properties. Their ability to deliver such a spending boost is constrained if they can’t find an available house. The limited supply is also forcing up prices just when many Americans are struggling with financial uncertainty because of the recession.
The combination of steady demand and falling mortgage rates has helped fuel a 3.5% rise in the median price of an existing home over the past year to $295,300.
“Home buyers considering a move to the suburbs is a growing possibility after a decade of urban downtown revival,” Yun said. “Greater work-from-home options and flexibility will likely remain beyond the virus and any forthcoming vaccine.”
In a complete reversal of the month prior, sales for June increased in every region. Median home prices grew in each of the four major regions from one year ago.
June 2020 existing-home sales in the Northeast rose 4.3%, recording an annual rate of 490,000, a 27.9% decrease from a year ago. The median price in the Northeast was $332,900, up 3.6% from June 2019.
Existing-home sales increased 11.1% in the Midwest to an annual rate of 1,100,000 in June, down 13.4% from a year ago. The median price in the Midwest was $236,900, a 3.2% increase from June 2019.
Existing-home sales in the South jumped 26.0% to an annual rate of 2.18 million in June, down 4.0% from the same time one year ago. The median price in the South was $258,500, a 4.4% increase from a year ago.
Existing-home sales in the West ascended 31.9% to an annual rate of 950,000 in June, a 13.6% decline from a year ago. The median price in the West was $432,600, up 5.4% from June 2019.