With the low-interest rates imposed in the pandemic, sales of homes rose to a 14-year high in the month of August. As a result, prices also increased, according to a new report from the National Association of Realtors (NAR). However, the low inventory of homes for sale could take away opportunities for buyers.
Increased Demand in Homes
Recent data from NAR relayed that existing home sales, like townhouses and condos, jumped by 2.4 percent in August from July. Compared with last year, the increase amounts to 10.5 percent. The rate was a record-high since 2006.
Meanwhile, sales of new single-family houses climbed by 4.8 percent from last year. Compared to the previous month, the rise equals to 14.7 percent. Moreover, first-time homebuyers account for 33 percent of purchases in August. For comparison, the figure surpassed August 2019 by two percent, while a percent short from July 2020.
“Home sales continue to amaze,” according to Nar’s chief economist, Lawrence Yun. “And there are plenty of buyers in the pipeline ready to enter the market.”
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," NAR’s chief economist Lawrence Yun says of latest existing-home sales data. https://t.co/c88QrcGAcT
— National Association of REALTORS® (@nardotrealtor) September 22, 2020
He also said that demand for housing will continue to rise. Especially right now, people with remote work setup might be compelled to buy a nice home for them. For Yun, this work-from-home arrangement could even last even when a COVID-19 vaccine becomes available.
However, the total housing inventory sunk by 0.7 percent in August compared with the previous month. It only amounted to 1.49 million units, 18.6 percent less than a year ago.
So the inventory of homes remains a problem for several years already. Unsold houses, if the current trend continues, will only reach 3.0 months. Last year of the same month, the figure is 4.0 months.
Yun blames the increased price of lumber in the past months. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
Construction of New Homes
Furthermore, Yun said that the demand for houses remains high. But currently, the supply for new homes remains low. “This imbalance will inevitably harm affordability and hinder ownership opportunities.”
Yun suggested that constructing more homes would “assure broad gains in homeownership.”
Meanwhile, NAR president Vince Malta stated that the past few months just proved the importance of the real estate in the US. Malta noted that the industry remains valuable to “our nation’s economy and to individuals who have been given an opportunity to rethink their location and redesign their lifestyle.”