The coronavirus pandemic and the need to stay at home that it has brought, has led more people to want to move. How is this trend affecting the real estate market at such a particular time?
In August, sales of new U.S. single-family homes increased to their highest level in nearly 14 years. This could suggest that the housing market has continued to gain momentum even as the economy’s recovery from the COVID-19 recession appears to be slowing.
According to CNBC, on Thursday, the Commerce Department said new home sales rose 4.8% to a seasonally adjusted annual rate of 1.011 million units last month. This was the highest level since September 2006.
New home sales are counted at the signing of a contract, making them a leading housing market indicator.
But, the exceptional demand for new and existing homes, brought on by the stay-at-home trend, however, has the housing market severely depleted.
Sales of newly built homes jumped to the highest level in 14 years in August, but builders’ supply dropped to just 3.3 months’ worth at the current sales pace.
Strong demand from homebuyers in July, coupled with rock-bottom mortgage interest rates, caused home prices to accelerate in major markets across the nation.
“Housing demand is robust, but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” said Lawrence Yun, the Realtors’ chief economist. “To assure broad gains in homeownership, more new homes need to be constructed.”