SILVER SPRING, Md. -- Sales of existing homes rose 2.4% in August to its highest level since 2006 as low mortgage rates and demand for space in the suburbs sustained strength in a housing market that's a bright spot for the economy.
The National Association of Realtors said Tuesday that sales rose to a seasonally adjusted annual rate of 6 million homes sold last month. Sales are up 10.5% from a year ago and back to pre-covid-19 levels of early 2020.
Although the pace of sales has slowed significantly after back-to-back months of more than 20% gains, it's the third straight monthly gain after big, consecutive declines in March, April and May.
The median price for an existing single-family home reached $315,000 in August, up 11.7% from August 2019. The annual gain was the fastest since 2013. Last month was the first time the median price for a home breached $300,000.
Despite rising prices, the lack of available homes has buyers snatching them off the market faster every month, especially with interest rates settling at historic lows under 3%.
If Congress fails to pass an additional virus-relief package, "it doesn't help" but the housing market "will remain strong" because of near record-low rates, Lawrence Yun, the association's chief economist, said on a call with reporters. "I do expect a further increase in sales for the remainder of the year. There's plenty of buyers in the pipeline."
Properties remained on the market for 22 days in August, down from 31 days in August of last year, the association's report noted. It said 69% of homes sold in August 2020 were on the market for less than a month.
A lack of available homes has been a problem for years, long before the virus outbreak spooked many homeowners into staying put. The number of property listings for sale in August was 1.49 million units, down 18.6% from August 2019, the 15th straight year-over-year decline.
The inventory of houses would last three months at the current sales pace. Anything below five months is seen as a tight market.
Many economists fear the lack of inventory will continue to stoke higher prices, pushing many would-be first-time buyers out of the market. First-time buyers made up about a third of purchases in August, about the same as all of 2019, according to a report from the association that year. Historically, the Realtor group says, first-time buyers have made up about 40% of the primary residence home buyers in the market.
"This lack of supply continues to push home-price growth higher," said economist Joel Kan of the Mortgage Bankers Association. "The 11% gain in prices is far above income growth and threatens overall affordability -- especially for first-time buyers."
"The imbalance of supply and demand will hurt affordability soon," so builders need to step up construction, Yun said. "The homeownership rate may decline if prices rise too fast. That's why it's critical to have the supply."
Regionally, home sales have climbed everywhere for three straight months when compared with the previous month. Median home prices grew at double-digit rates in each of the four major regions from one year ago.
Sales jumped 13.8% In the Northeast and 1.4% in the Midwest. The South and West saw more modest gains of 0.8% over the previous month.
All four regions saw median price gains of more than 10% from one year ago.
Previously owned home sales account for roughly 90% of U.S. transactions and are calculated when a contract closes.
Builders in August began work on the most new single-family homes since February, according to Commerce Department data last week. The figure also reflected a decline in the tropical storm-hit South, though a rise in permits signals the region will see a pickup in construction in coming months.
Purchases of previously owned single-family homes rose 1.7%, while sales of condominiums increased 8.6% from a month earlier, according to the Realtors association's data.
Information for this article was contributed by Matt Ott of The Associated Press and by Olivia Rockeman of Bloomberg News.
