The Chicago-based National Association of Realtors (NAR) announced, on July 22nd, the Existing Home Sales statistics for the month of June 2021. This report stated that June 2021’s seasonally adjusted home sales rose 1.4% month-over-month to 5.86 million units. This reversed the trend of 4 declining months in a row, but the year-over-year increase of 22.9% from 4.77 million units in June last year, was substantially less than the 44.6% year-over-year gain attained in the previous month. The persistently strong demand seems to be finally abating.
Existing home median price again jumped by an impressive 23.4% to $363,300 from last June’s $294,400. This would mean 112 months of consecutive year-over-year increase since March 2012, extending the record. NAR’s chief economist stated that, broadly speaking, median home prices are in no danger of a decline given the continuing tight inventory conditions, but he expects home prices to rise more slowly by yearend.
As stated above, housing inventory remains tight. Although housing inventory at the end of June gained 3.3% to 1.25 million units compared to last month, this level was still a considerable decline of 18.8% from 1.54 million units year-over-year. As a result of this historically low inventory of homes, the average number of days on the market in June remained at a record short time of just 17 days, tying the record of the two previous months. Compared to 24 days a year ago, it continues to show the powerful demand for existing homes. In June, as in May, 89% of the homes sold within a month after being listed on the market, the report stated.
Mortgage interest rates for 30-year fixed-rate loans rose imperceptibly from 2.96% in May to 2.98% in June, but they still remained in the sub-3% territory. It lends credence to the belief that the 30-year fixed rate mortgage will stay below 3.5% until the end of 2021.
The report also stated that big capital gains from both the housing market and the stock market have increased the number of all-cash transactions. But, for the first-time buyers who need mortgage financing are facing the challenging hurdles of record-high home prices and low inventory. Therefore, even though interest rates are historically low, these dual hurdles have been difficult to jump over for some potential purchasers.