Home prices soar inventory drops to historic levels
Prices, meanwhile, continued their ascent, reaching a median of $311,800, up 14.8% from a year ago. Sales and prices rose in all regions of the country, although sales were strongest in the Northeast.
As the summer ends, the housing market tends to cool off with the weather. But this year, that trend is different.
“Home sales traditionally taper off toward the end of the year, said Lawrence Yun, chief economist for the National Association of Realtors, “but in September they surged beyond what we normally see during this season.”
The market is being driven by three factors: record-low mortgage rates, a low inventory of housing stock and an increased appetite for vacation homes as more people work from home.
Annual growth of single-family home prices has risen by more in the last three months than in any previously recorded period dating back to 1969,” said Matthew Speakman, economist for online home seller Zillow. “This torrid growth in sales may ultimately be done in by an inventory crunch that’s only getting worse – it’s hard to keep setting sales records when there’s so little for sale – forcing a slowdown in transactions in the coming months. But with demand for housing as high as it is, it’s unlikely that a slowdown in sales will be substantial.”
The housing sector has been among the strongest in the economy, along with the stock market, defying the effects of COVID-19 and actually benefiting from it. Americans have shifted their spending habits away from travel, leisure and entertainment. Many of those options are no longer available or are less desirable amid concern over personal safety.
Existing home sales reflect completed transactions and include all forms of housing from single-family dwellings to condominiums and coops. The annualized pace of 6.54 million compares to 5.41 million in September 2019.
Inventory, meanwhile, continues to fall, standing at 1.47 million units in September – a drop of 19.2% from a year ago. That equates to a 2.7-month supply, down from four months a year ago.
“There is no shortage of hopeful, potential buyers, but inventory is historically low,” Yun said.
He noted that sales in destinations classified as vacation spots have been unusually robust, up 34% year over year.
“The uncertainty about when the pandemic will end coupled with the ability to work from home appears to have boosted sales in summer resort regions, including Lake Tahoe, mid-Atlantic beaches and the Jersey Shore areas,” he added.
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