Sales of both newly built and previously owned homes hit record levels in June, while pending home sales also edged higher. These are signs of sturdy demand in the housing market, which was made possible by low mortgage interest rates and solid growth in employment.
Encouraging housing starts and permit numbers have also put to rest the niggling concerns about supply constraints. This calls for investing in fundamentally sound real estate mutual funds.
New Home Sales Climb to 8-Year High
Sales of newly built single family homes jumped 3.5% in June to a seasonally adjusted annual rate of 592,000, the highest level since Feb 2008, according to the Commerce Department. May’s sales were also revised upward to a 572,000 annual rate from an earlier estimate of 551,000.
Purchases of new-single family homes soared 10.1% during the first six months of the year compared with the same period last year, according to the Commerce Department. Robert Dietz, chief economist for the National Association of Home Builders (NAHB), said that the “fact that new home sales reached their highest pace in over eight years shows the housing market is gaining momentum.â€
Home Resales Hit 9-Year High, Pending Sales Edge Up
According to the National Association of Realtors (NAR), sales of existing homes rose 1.1% in June from May to a seasonally adjusted rate of 5.57 million, its highest level since Feb 2007. Shares of first time buyers touched 33% in June, the highest level since July 2012.
A measure of homes under contract for sale rose slightly in June. Pending home sales increased 0.2% in June compared to May and was 1% higher than the same period last year, according to the NAR. This puts pending home sales at the second highest level in the last 12 months. Sales outperformed expectations and the reasons can well be traced to lower mortgage rates and strong jobs report.
Affordable Home Financing, Upbeat Jobs Data
Bond prices increased in June as Brexit woes pushed investors to seek safe-haven assets. Higher bond prices led to lower yields. This came as good news for home borrowers as mortgage rates also dipped, as they tend to follow the trajectory of the yield on the 10-Year Treasury bond. According to Freddie Mac, the 30-year fixed-rate mortgage was 3.57% in June, down from 3.98% in June 2015.
