Existing home sales climbed 2.4% in August to a seasonally adjusted annualized rate of 6 million units, as record-low mortgage rates continue to help fuel strong housing demand.
Sales were up 10.5% from August 2019, according to National Association of Realtor (NAR) data, with the Northeast leading the way but sales strong in all regions of the U.S. If anything, the numbers could have been stronger if not for a lack of supply. The NAR said there were 1.49 million homes for sale at the end of August, down 18.6% annually.
"Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," Lawrence Yun, NAR's chief economist, said in a statement. "Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery."
Strong demand and limited supply are driving up pricing as well. The median price of an existing home sold in August was $310,600, up 11.4% annually. August was the 102nd consecutive month of year-over-year price gains. That's good news both for realtors and real estate focused companies including Zillow Group (NASDAQ:ZG) and Redfin (NASDAQ:RDFN).
Overall housing inventory is unlikely to grow in the months to come, the NAR said, due to higher lumber prices and supply chain issues related to the California wildfires. The group warned that the market dynamics could combine to squeeze lower-income buyers out of the market, a scenario that the NAR says needs to be addressed through homebuilders constructing more housing designed for lower-income families.
"Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities," Yun said. "To assure broad gains in homeownership, more new homes need to be constructed."