Shamrock Realty Group

Cash transactions climbing as prices rise, while rates on mortgages remain low

WASHINGTON – Existing-home sales increased in June, snapping four consecutive months of declines, according to the National Association of Realtors. Three of the four major U.S. regions registered small monthover-month gains, while the fourth remained flat. However, all four areas notched double-digit year-over-year gains.

Total existing-home sales —completed transactions that include single-family homes, townhomes, condominiums and co-ops — grew 1.4 percent from May to a seasonally adjusted annual rate of 5.86 million in June. Sales climbed year-overyear, up 22.9 percent from a year ago (4.77 million in June 2020).

“Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” said Lawrence Yun, NAR’s chief economist. “Home sales continue to run at a pace above the rate seen before the pandemic.”

Total housing inventory at the end of June amounted to 1.25 million units, up 3.3 percent from May’s inventory and down 18.8 percent from one year ago (1.54 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, modestly up from May’s 2.5-month supply but down from 3.9 months in June 2020.

The median existing-home price for all housing types in June was $363,300, up 23.4 percent from June 2020 ($294,400), as every region recorded price jumps. This marks 112 straight months of year-over-year gains.

“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”

Properties typically remained on the market for 17 days in June, unchanged from May and down from 24 days in June 2020. Eighty-nine percent of homes sold in June 2021 were on the market for less than a month.

First-time buyers accounted for 31 percent of sales in June, also even with May but down from 35 percent in June 2020. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 2020 – revealed that the annual share of first-time buyers was 31 percent.

Individual investors or secondhome buyers, who account for many cash sales, purchased 14 percent of homes in June, down from 17 percent in May and up from 9 percent in June 2020. All-cash sales accounted for 23 percent of transactions in June, even with May and up from 16 percent in June 2020.

Distressed sales – foreclosures and short sales – represented less than 1 percent of sales in June, equal to May’s percentage but down from 3 percent in June 2020.

“Huge wealth gains from both housing equity and the stock market have nudged up all-cash transactions, but first-time buyers who need mortgage financing are being uniquely challenged with record-high home prices and low inventory,” Yun explained. “Although rates are favorably low, these hurdles have been overwhelming to some potential buyers.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.98 percent in June, slightly up from 2.96 percent in May. The average commitment rate across all of 2020 was 3.11 percent.

Single-family home sales decreased to a seasonally adjusted annual rate of 5.14 million in June, up 1.4 percent from 5.07 million in May and up 19.3 percent from one year ago. The median existing single-family home price was $370,600 in June, up 24.4 percent from June 2020.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 720,000 units in June, up from 710,000 in May and up 56.5 percent from one year ago. The median existing condo price was $311,600 in June, an annual increase of 19.1 percent.

“NAR continues our conversations with policymakers and leaders from across the industry in an effort to boost housing inventory and increase access to safe, affordable housing for all Americans,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty.

“As the nation’s economy continues to recover from COVID-19, securing policies that are in the best interest of U.S. consumers and homeowners remains NAR’s priority.”

Regional Breakdown

Existing-home sales in the Northeast increased 2.8 percent in June, recording an annual rate of 740,000, a 45.1 percent rise from a year ago. The median price in the Northeast was $412,800, up 23.6 percent from June 2020.

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