June 2021 Existing and Pending Home Sales

June 2021 Existing and Pending Home Sales

Aug 19, 2021
4:09
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After four straight months of sliding home sales, home sales bounce back in the month of June. It is a small percentage gain, but nonetheless shows signs of stabilization in terms of sales activity.

Hello, everyone. I'm Lawrence Yun, chief economist with NAR, and good news on the housing front. After four straight months of sliding down in home sales, home sales bounce back in the month of June. It's a small percentage gain but nonetheless it is showing signs of stabilization in terms of sales activity. Let's remember there was a huge surge of activity in autumn and winter months of 2020 and then since then some sliding down but now bounce back. Home sales still comfortably above pre-pandemic activity.

Now what is not stabilizing is home prices. We still have supply shortage and home sales still running reasonably strong above pre-pandemic level. Consequently prices up better than 20% from one year ago. Some of the gains are not pure price appreciation, but just that more million-dollar homes are getting sold.

Upper-end market doing very well in terms of the unit sales, while the lower-end starter homes is being hindered by lack of inventory. The multiple offers are still happening but less intensively. In the prior months, for a typical home, there was about four or five multiple offers. Now we are beginning to see only three or four multiple offers.

Days on the market still remain swift at 17 days, matching the fastest pace that we recorded last month, but it is no longer declining. In the meantime, inventories are beginning to pick up. Some of it is seasonal pattern, but the fact that we are getting more inventory means that months supply, the overall tightness of the market, now at 2.6 months. It was under two months back in winter but now beginning to loosen up somewhat.

We recently released the home buying activity by foreign buyers. Foreign activity drastically declined during the months of the pandemic. No surprise given the travel restriction. Globally, we saw the number of foreign buyers, whether coming from Canada, Britain, China, or Mexico, are falling drastically, but now with some likelihood of opening up the international travel, we do anticipate some international buyers to pick up. Nothing like what had happened three or four years ago, but some degree of picking up in international buyers. Maybe they are needed at the time where we are beginning to see more inventory coming into the market. International buyers are predominantly looking at few states: California, Florida, Texas, New York and New Jersey, and Arizona, but overall I would say given the home prices are still rising at 20%, it is still a very solid market. 

We hope that price appreciation moderates towards the year's end and maybe sometime in 2022 home price growth matches people's income growth. That would be an ideal condition but we need a steady increase in housing supply, and whether it is from the builders or the existing homeowners listing their property, I think we have turned the corner on inventory and expect more inventory to steadily show up. Thank you.

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