Despite the rise in coronavirus cases in June, there was some good economic news. Sales of existing homes in the US surged by 20.7% compared with the previous month, according to the National Association of Realtors. The surge followed a cliff-dive in April and May, with sales of previously sold homes plummeting by 32% from February.
June’s partial recovery to a seasonally adjusted annual rate of 4.7 million homes was an encouraging signal that the deepest valley of the economic collapse may be behind us, though there are still miles to travel. The June number was still down by 11.3% compared with the same period in 2019.
Economists postulate that several factors contributed to the surge. Mortgage interest rates are at historic lows, making home ownership more affordable to many first-time buyers. In light of the pandemic, some families are seeking more spacious accommodations in the less congested suburbs. There has also been an uptick in purchase of second homes. And many families, who hunkered down during the early lockdowns, have ventured back out to take a peek as their job prospects become more predictable.
In light of an excessively low inventory of homes for sale, prices are rising as well. The median selling price of a single family home rose to $295,300 in June, a 3.5% increase over last year. According to the Greater Chattanooga Realtors, median home prices in the Chattanooga area rose 4.7% in the past year to reach $225,000 last month.
The current supply of homes for sale was just four months’ worth of inventory. Interestingly, according to NAR, sales of homes in the $250,000 to $500,000 range actually increased slightly over 2019, while both cheaper and more expensive homes declined in sales. And in another positive sign, 35% of all transactions were by first-time home buyers.