Market Recap: Home Price Appreciation Moderates, New Home Sales Surge, Pending Home Sales Increase
Posted On August 28, 2020
Mortgage rates did not move significantly this week, trending slightly upward from recent 12-month lows. Home prices continue to rise at a moderate pace. New home sales jumped to the highest level since 2006. The pending home sales index also increased.
The S&P CoreLogic Case-Shiller home price index appreciated 3.5% year-over-year in June, far below the average 6% annual gains the index showed just two years ago. The seasonally adjusted 20-city index showed no month-over-month change. Phoenix led the index in annual gains up 9% year-over-year, followed by Seattle up 6.5% annually and Tampa up 5.9% annually.
New home sales, or the sales of newly constructed homes, surged 36.3% month-over-month in July, the highest single month gain since 2006. Annually, sales are up 13.9%. In addition to an industry-starved market, home buyer preference has changed. George Ratiu, senior economist at Realtor.com noted, “with larger homes, greener backyards, garages and home offices ranking at the top of home buyers’ lists, new homes in the suburbs fit the bill and have been a welcome answer to a housing market parched for existing inventory.”
The pending home sales index increased 5.9% month-over-month in July, the third straight month the index has posted increases. Though the gain is one-third of June’s monthly gain, annually sales are up 15.5%. National Association of Realtors (NAR) chief economist Lawrence Yun estimated, “nine contracts are being signed from every ten new listings.
Buying a newly constructed home may cost more upfront than buying an existing home, but new construction often comes with warranties and other perks. If you have specific needs for your home, new construction may be the best way to achieve those goals. If you have any questions about buying a newly built or existing home, let us know.