In August, U.S. home prices reached their highest median value ever, with sales equaling a pace not seen since December 2006.
August sales rose 2.4 percent from July, totaling six million units, a 10.4 -percent jump from August 2019. The typical home remained on the market for just 22 days, compared to 31 a year earlier. Cash offers and bidding wars with ten or more competitors in prime locales were not uncommon, realtors report.
Cash sales accounted for 18 percent of August’s transactions, up from 16 percent in July. Second-home buyers and individual investors bought 14 percent of homes sold during the month.
The median price for all housing types for the month was $310,600, gaining in every region of the country and up 11.4 percent from $278,800 a year previous. August was the 102nd consecutive month of year-over-year gains.
Record low interest rates helped spur the market.
Also, there are not enough houses up for sale to meet demand; in August, there were 18.4 percent fewer houses on the market than a year earlier.
With many people uncertain of the economy’s near-term future, millions of homeowners who might sell are waiting. Also, natural disasters along the Gulf Coast and western U.S. has destroyed thousands of homes; no ready replacements are waiting for displaced people to snap them up.
The word on the Street is the combination of high prices and fewer homes for sale is likely to persist into next year, in part because western wildfires have burned millions of acres of timber. An expected shortage of lumber will drive up prices, making homes even more expensive.
“Over recent months, we have seen lumber prices surge dramatically,” said Lawrence Yun, Chief Economist for the National Association of Realtors. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
“The combination of higher prices and low supply is shutting many lower-income Americans out of the market, and in some regions with the most expensive housing, even middle-income Americans can’t afford a home,” said Robert Frick, corporate economist at Navy Federal Credit Union.
TREND FORECAST: The future of home prices will be determined by the level of the equity markets. Should the Banksters and Washington’s cheap money policies keep the markets flying high, so, too, will home prices. When the markets crash, the real estate market will crash alongside it.
