It’s The Biggest Bounce-Back In U.S. Housing History

Home purchase contracts jumped 44% in May, marking the largest one-month increase sales activity in recorded history. Home sales is completing its v-shaped recovery.

June 29, 2020 by Dan Green

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The Housing Headline

Home buyers snatched up properties for sale in May as housing made its v-shaped recovery.

The News Behind The Housing Headline

According to the National Association of REALTORS®, home buyers wrote 44 percent more contracts in May as compared to the month prior – the most massive one-month jump in home sales activity in recorded history.

Buyers and sellers matched up quickly in May, and home prices rose.

The Existing Home Sales report showed that the typical U.S. home sold in 26 days in May, nine days faster than during the first month of national orders to shelter-in-place, with first-time home buyers accounting for more than one-third of all sales.

Home values are up close to six percent in the last year, on average, and inventory remains scarce.

At the current pace of sales, the real estate trade group reported, every MLS-listed home for sale would get purchased within 18 weeks. But, that was before it released its most recent Pending Home Sales Index.

The forward-looking housing report surged, suggesting a v-shaped home sales pattern and an immediate reduction in homes for sale nationwide.

Prices should rise through the summer.

Meanwhile, 30-year fixed-rate mortgage rates averaged 3.23 percent in May. Last month’s home buyers are paying an average $1,000 per month on a loan size of $219,000 .

Why This Housing News Matters To You

Home values don’t always drop in a recession, as this year’s recession proves.

Fewer home buyers entered the market because of coronavirus and orders to shelter-in-place, but even fewer sellers chose to list their homes. As a result, demand exceeded supply this spring, and home prices climbed in the majority of U.S. markets.

Real estate data firm Altos Research suggests that trend to higher prices will continue through the summer, citing three key factors:

  1. New weekly listings are down roughly 20 percent from normal summer levels
  2. Home inventory is decreasing weekly
  3. Price reductions, a signal of market weakness, are at all-time lows

As prices climb, though, mortgage rates are holding steady near all-time lows. 15-year fixed-rate mortgage rates are in the mid-2s for qualified home buyers, and 30-year fixed-rate mortgage rates are approaching the same.

Both interest rates are down more than a half-percentage point since the New Year, and there’s more room to fall.

This year’s housing market looks different from the last time the United States entered a recession. In 2008, home supplies were thick. Today, home supply in your hometown is scarce.

58 percent of U.S. homes sold in May sold in less than a month. When homes come up for sale, buyers buy them up quick.

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