The National Association of Realtors reports Existing-Home Sales Climb Record 20.7% in June.
Key Points
- Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic.
- The median existing-home price for all housing types in June was $295,300, up 3.5% from June 2019 ($285,400), as prices rose in every region. June’s national price increase marks 100 straight months of year-over-year gains.
- Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019.
By Region
- Northeast: Sales rose 4.3%, at an annual rate of 490,000, a 27.9% decrease from a year ago. The median price was $332,900, up 3.6% from June 2019.
- Midwest: Sales rose 11.1% at an annual rate of 1,100,000, down 13.4% from a year ago. The median price was $236,900, a 3.2% increase from June 2019.
- West: Sales rose 31.9% at an annual rate of 950,000, a 13.6% decline from a year ago. The median price was $432,600, up 5.4% from June 2019.
- South: Sales rose 26.0% at an annual rate of 2.18 million, down 4.0% from a year ago. The median price in the South was $258,500, a 4.4% increase from June 2019.
Impact of Fed’s Actions on Financial Assets
Once again we see the impact of the Fed’s actions in financial assets while most of the real economy languishes.
“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply,” said Lawrence Yun, NAR chief economist.
Unprecedented Recession Synchronization
Yesterday, I commented “Inflation is easy to find. Look no further than the stock and bond markets. … The Fed can print money and Congress can hand it out, but neither can dictate where the money goes.”
But inflation is not where the Fed wants it. Add housing to the list.
Home prices are not even in the CPI. They should be.
For related excellent comments from Lacy Hunt, one of the world’s biggest bond fund managers, please see Unprecedented Recession Synchronization and What it Means.
Mish
The small bounce in the northeast can be explained by stringent stay-at-home executive orders. June was the reopening, so the northeast may have much better July/August numbers compared to the rest of the country.
I live in one of the hottest housing markets in the country, and I am seeing prices drop and listings going up every day.. I give it a couple years, and I will be doing some bottom fishing….
In all the articles today on this, I don’t seem to see anyone offering another possibility – that people who lost their jobs or anticipate losing their businesses are being forced to liquidate their homes. There has to be some of this going on. The question is how much?
The lull ending?
….
“The share of loans in forbearance dropped to its lowest level in over two months, driven by an increase in the pace of exits as more homeowners have been able to get back to work,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The decline in the forbearance share was broad based, with decreases for GSE, Ginnie Mae, and portfolio/PLS loans.”
Added Fratantoni, “Almost half of borrowers remaining in forbearance are now in an extension of the original term, while the remainder are in their initial forbearance plan. The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month.
Call center volume related to forbearances did pick up, as a percent of servicing portfolio volume (#), those calls increased from 7.8 percent to 8.3 percent. Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained flat relative to the prior week at 0.13 percent.
All they (Fed, GSE, Ginnie Mae, etc) need to do is allow those in forebearance to refinance and then have the Fed bail out the bondholders more. Why stop at $5T ?
Maybe.
MBS is messy stuff. GSEs guarantee all but only owns some. Any one security made up of thousands of individual mortgages. MBS is tranched – equity, junior, AAA senior stuff and sold off separately. Back years ago when I looked into it the boiler plate legalese several hundred pages long. Owners of different segments had different objectives and not on same page. Some high percentage of total had to agree before any changes made. Don’t know if they streamlined since, but back then herding cats.
Opinion: The feared jumbo mortgage debacle is here — thanks to the coronavirus — and ready to pound the housing market
No need to worry, all banks are TBTF.
Also, the author seemed to not know about CA AB5 which basically outlawed freelance work. In addition to my fulltime W2 job, in years past I billed $10K+/yr in 1099 work. In 2020, my number is zero.
Good point. Statistics depend on how they are interpreted. Everytime.
Urban homes like West L.A., high rises like Koreatown and Manhattan NYC are in trouble. Suburban SFR’s like San Bernardino County, and smaller states like Idaho are going to be future benefactors. Pro tip: watch places like Cheyenne WY for desirability. Didn’t Mish move to the St George UT area? That too.
Ever been to Cheyenne? Moving there would take a very desperate Californian – or anyone else.
Of course, it would be too much to expect Yun to reflect on what is happening in the rental market that might be driving sales … especially NYC.
CNBC headline a week ago:
“Empty Manhattan apartments reach record levels, landlords slash rent”
“but sales are down 11.3% from a year ago.”
…
Despite 30yr mortgage dropping from 3.8% ish to 3.0% ish year over year.
I got a non-conforming loan but not jumbo that has rate of 2.98% for a 30 year refi for credit score 750 and over. I basically got 10% off my principal loan amount (which will pay off my 10 year no interest 2nd mortgage) for free because rates have fallen so far. I have one relock available to me within 90 days. I see no way the Fed can exit these bond markets anytime soon without really bad consequences. Extend and pretend is going to make money cheaper. What will happen when new banks startup and start offering home loans at 1-2% for new buyers or refis ?
“I see no way the Fed can exit these bond markets anytime soon without really bad consequences. Extend and pretend is going to make money cheaper.”
…
That is the way I see it.
For a long time I was alone on NIRP island … seen a few other souls recently.
I’m fully aware of the downside, but at SOME point TPTB will go there as “least bad option”.
They’ll do whatever it takes, to keep the theft rackets, which is all their general lack of abilities affords them to live off, going for a little longer.