New and existing home sales up but…

Recent data shows both increased new and existing home sales:

Sales of new homes in the US soared to their highest level since December 2006 in July as Americans took advantage of historically low interest rates.

Single-family home sales leaped 13.9% to a seasonally adjusted annual rate of 901,000 units, according to data released by the US Census Bureau on Tuesday. Median sales price gained 7.2% to $330,600 from the year-ago period…

The better-than-expected data follows a similarly positive report on existing home sales. Sales of previously owned homes spiked a record 24.7% to a seasonally adjusted rate of 5.86 million last month, according to a Friday release from the National Association of Realtors. Economists anticipated a 5.41 million rate.

Some of this is not a surprise given low interest rates. There is no mention here, but if it is true that significant numbers of city-dwellers are looking elsewhere, that could be driving demand.

At the same time, this is an odd time for increased housing sales. We are in the middle of a pandemic and the uncertainty and unemployment that has brought. Some indicators of the economy are okay but others are less positive.

With that, it is hard to know whether this is more of a blip or a long-term trend. Perhaps this is part of a rebound in homeownership or an odd confluence of factors in an unusual year.

And it would be helpful to have more data. The Census report suggests 61% of the private new homes sold in July 2020 were between $200k and $399k while 29% were over $400k. What kinds of homes are these and where exactly are they located (beyond regions, how about suburbs versus cities?)

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