Beginning in March, COVID-19 ushered in a “catastrophic” environment for real estate, marked by unemployment, economic uncertainty, and safety precautions that hampered transactions. After three consecutive months of decline, existing home sales were once again on the upswing in June—smashing records and offering some glimpses of what the post-pandemic market could look like along the way.
According to a new National Association of Realtors report, sales of existing homes in the United States rose sharply in June, a 20.7% increase over May’s low point for a seasonally adjusted rate of 4.72 million housing units. Percentage-wise, it represents the biggest monthly gain since the NAR first started tracking such data in 1968.
A few factors—some that could outlast the pandemic—thawed the frozen home buying market. Thirty-year fixed mortgage rates dipped just under 3%, hitting a nearly 50-year low. An ebbing of COVID-19 cases in some areas of the country (or at least the loosening of lockdowns) also did away with some of the logistical obstacles and health concerns that led real-estate activity to grind to a halt.
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With some buyers now wary of dense urban environments, June could also mark the beginning of a longer-term exodus from larger cities in search of more space in and outside of the home. NAR chief economist Lawrence Yun told the Wall Street Journal that June saw comparably higher sales of rural and suburban homes in the relative sprawl of the West and South. Additionally, sales of homes priced $250,000 to $500,000 significantly outpaced that of both cheaper and more expensive alternatives.
There’s evidence that the newfound growth in existing home sales could translate to increases in home building. Housing starts jumped 17.3% from May to June, according to Census Bureau data. The Journal also notes that pending new-home sales rose from May to June as well. As time goes on, this could address current issues with the housing inventory, which only increased 1.3% from May to June and sat 18.2% below where it was in June 2019.
Given the total housing market accounts for roughly one-sixth of the U.S. economy, these increases offer a rare bright spot at a time when GDP is set to significantly contract. However, there’s still a long way to go to catch up to where things were before the pandemic began. June 2020’s sales were still down 11.3% from the 5.32 million sales recorded one year prior. It’s even further off from the 5.76 million sold in February 2020—a 13-year high.
