US existing home sales jump in June, inventories remain low
By Alexander Bueso
Date: Wednesday 22 Jul 2020
(Sharecast News) - Sales of second-hand homes in the US leapt past forecasts last month as buyers moved to pick up what they perceived as bargains.
According to the National Association of Realtors, the annualised pace of existing home sales soared by 20.7% in June when compared to the month before to reach 4.72m
Nevertheless, economists had penciled-in a slightly faster pace of 4.8m.
"The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown," said NAR chief economist, Lawrence Yun.
"This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue."
Against a year ago, sales were down by 11.3%.
Home price inflation was however headed higher as well, with the median price of an existing home rising by 3.5% from a year back to $295,300.
Propping up prices, the amount of homes available for sales remained beneath its year earlier levels.
Housing inventory stood at 1.57m units, the equivalent of four months' worth of supply, down from 4.8 months worth in May and 4.3 in June 2019.
The amount of time spent by a property on the market also declined, from 27 days one year back to 24 days.
Commenting on Wednesday's figures Nancy Vanden Houten and Gregory Daco at Oxford Economics said: "Further gains in sales will come more slowly. While fundamentals, including pent-up demand and record-low mortgage rates, will support some activity, the slow recovery in the economy and labor market will limit the growth in home sales.
"The leveling off in the recovery as new Covid-19 cases surge lends a further downside risk to the forecast."
Ian Shepherdson at Pantheon Macroeconomics was more upbeat.
"Single-family existing home sales remain well short of their pre-Covid peak - by about 18% - but the message from strong mortgage demand is that the lost ground will soon be recovered," he said.
"If investors return too - the proportion of investor transactions was just 9% in June, down from 17% in February - the recovery will be even stronger."
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