Annual U.S. housing sales rose higher than expected last month to 13.8% according to the U.S. Commerce Department. This is the highest increase since 2007. June’s existing home sales were up 20.7% over May’s sales. Home prices are up 5.6% overall compared to last year at this time, even amidst the Coronavirus and a general housing inventory shortage. Realtor.com reported a housing supply of 4.7 months across the U.S. when 6 month’s inventory is considered healthy. The housing shortage and strong demand is pushing up prices.
Utah Housing Statistics
Utah Median List Price Y/Y – Realtor.com
Housing sales and median prices are up dramatically in many Utah counties, while housing inventory is at an all-time low. Davis, Tooele, and Washington counties are experiencing double-digit increases in the median housing price with Weber and Utah county knocking at the door. Even Salt Lake County is above the national average at 5.8%. The 40-year appreciation average year-over-year is 4.2%. Low inventory is driving prices up because the demand for new homes hasn’t subsided.
Although housing prices are up, buyers are still coming in strong because they get more for their money with the average mortgage interest rate hovering around 3% according to Fannie Mae. Homes of the same price are averaging $125 cheaper per month over last year.
Why is housing up when the economy is down?
The economy is suffering primarily from the pandemic, says Shepherdson, the Chief Economist at Pantheon Macroeconomics. Job losses and financial hardships are hitting younger workers the most. The median age restaurant employee is 29 while the median age homebuyer is 47. Those able to buy and sell properties are taking advantage of the low interest rates to refinance and save money, sell their home and take advantage of the increased appreciation, or buy at a discount based on the low interest rate.
Is this a bandwagon or opportunity?
Some housing experts believe the rise in home sales in June and July is a rollover from the pull back in March and April. The consensus is these buyers were already planning to move. However, some speculate that demand will continue in many markets as long as rates stay low and the worst of the coronavirus impact is isolated to certain geographic areas and market segments.
“It may seem prudent to wait and see what happens”, says Mike Anderson, CMO of Intercap Lending. “But if you are in a position to spend money and keep the economy going, please do!” Since May, Mike has purchased two rental properties to prove his conviction. “Support your local businesses, eat out or use curb-side pickup, donate to groups who support struggling businesses, and invest in property. Passing on a long-term investment at these rates is a decision you might regret when rates go up.”
Low mortgage rates and cautious optimism may be the guiding light through this temporary darkness. At least for now, home sales are not affected by this economic storm. Talk to your Intercap loan officer to discuss rates and opportunities to buy or refinance.
