US existing home sales in August surged to their highest level in nearly 14 years as historically low mortgage rates continue to boost the housing market, the National Association of Realtors (NAR) reported on Tuesday.
Total existing home sales rose 2.4 per cent from July to a seasonally adjusted annual rate of 6 million units in August, the highest level since December 2006, the NAR said.
The median existing home price for all housing types in August was 310,600 US dollars, up 11.4 per cent from a year ago, as prices rose in every region, according to the NAR.
"Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," said NAR's chief economist Lawrence Yun. "Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3 per cent and with continued job recovery."
However, home sales were hampered by the lack of supply. Total housing inventory at the end of August totaled 1.49 million units, down 0.7 per cent from July and down 18.6 per cent from a year ago. At the current sales pace, there was only a 3-month supply of homes available for sale at the end of August, according to the NAR.
"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."
Mark Vitner, senior economist at Wells Fargo Securities, expected home sales to remain near their current strong levels in September and October.
"Normally sales would slow as the school year began and the football season got underway. This year, however, buyers are still making up for lost time and face fewer seasonal diversions," Vitner wrote Tuesday in a note.
"Moreover, the demand for homes is benefitting from the surge in remote working and remote schooling, which continue to drive the pursuit for usable space," he wrote.
Despite the pandemic, the housing market has become a bright spot in the US economy due to record-low borrowing costs, with home building and purchase activity surging in recent months.
