One would think a pandemic would bring the real estate industry to a grinding halt. But that does not appear to be the case. In fact, real estate in Houston is enjoying quite a boom right now. Existing home sales have rebounded quite strongly in June – up from pandemic-driven lows earlier in the year. Whether this recovery is sustainable over the long term remains to be seen, but the fact remains that after months of declining sales activity, Americans are rushing out in droves to buy homes.
According to MarketWatch, sales of previously-owned homes increased 20 percent in June 2020 as states started to open their economies back up after months of coronavirus-related lockdowns.
The National Association of Realtors said existing-home sales happened at a seasonally-adjusted annual pace of more than 4.7 million, representing a huge rebound from May, which saw sales plummeting to a low not seen since July 2010.
With sales recoveries being very strong, buyers were ready to purchase homes and properties that they had their eye on throughout the shutdown. Now, they’re taking action. Many have their jobs back, their kids are going back to school, and even with some continued precautions and advisories, life is largely getting back to a new normal.
The Details
While home sales have been surging across the United States, the West Coast witnessed the biggest increase with a 32 percent uptick in July alone.
Unsold inventory had been at a four-month supply towards the end of June; to put that in perspective, a six-month supply of homes indicates a balanced market. Compared with this same time last year, inventory has been down 18 percent.
What drove prices higher? Mostly it was the low supply of homes for sale. The median home price in June was $295,000, up three and a half percent over last year. June marked the 100th month in a row in which home prices were trending up on a yearly basis.
Record-low mortgage rates also improved affordability, giving people yet another incentive to buy.
The Big Picture
As more and more states started to reopened business following COVID-19-related lockdowns, Americans began rushing back into the housing market. This suggests that many buyers had been delaying their home purchase until it looked safe to do so.
Looking forward: after initial lockdowns were lifted, many states have been seeing surges in coronavirus cases, especially states with historically large real-estate markets such as California, Texas and Florida. Real estate professionals suggest that the rise in COVID-19 infections will impact the housing market in some way, but it’s too early to see the effects of that.
The resurgence in cases will likely continue to impact demand while keeping inventory suppressed. However, now that agents, buyers and sellers have had plenty of time to adjust to virtual tools and social distancing practices, the impact on sales will be less than what was reported back in the spring.
How the housing market does in the upcoming months will depend largely on how strong the economy is overall. If another wave of job losses or evictions occur, this could further threaten home sales growth over the long haul.
Over time, the constrained supply of homes will likely limit home sales, with a lack of inventory pushing prices even higher and forcing some buyers out of the market. Home prices may rise even more spurred on by heavy buyer competition and supply shortage.
Contact Berkshire Hathaway Home Services Premier Properties
Ready to sell? As you can see, now is the time. Just contact Berkshire Hathaway Home Services Premier Properties today at 832-626-4889.