LOS ANGELES – The U.S. housing market has staged a furious comeback this summer, even as the economy struggles to regain its footing after being knocked into a recession due to the coronavirus.
After stalling in the first few weeks of the pandemic, U.S. home sales have surged in recent months to the highest level in more than a decade.
The strength in housing has been driven by ultra-low mortgage rates, fierce competition for a chronically low inventory of properties on the market and a wave of millennials and others increasingly vying to become homeowners.
At the same time, the uneven economic fallout from the pandemic, which has hurt many low income Americans while leaving many white collar workers relatively unscathed, has helped keep the downtrodden economy and job market from being a drag on the housing market’s comeback.
“Housing is one of the strongest sectors of the economy this year,” said Jeff Tucker, senior economist at Zillow. “For Americans whose finances are still intact, folks with good credit who didn’t lose their job, they’re forging ahead buying their first home.”
Sales of previously occupied U.S. homes have risen three months in a row after slowing sharply in March, April and May. They climbed to a seasonally adjusted annual rate of 6 million homes in August, the fastest pace since December 2006, according to the National Association of Realtors.
Demand for newly built homes has also been red hot. Sales rose in August by 4.8% to a seasonally adjusted annual rate of 1.01 million units, according to the Commerce Department. New home sales are now up about 43% from this point last year.
Mortgage rates have been a key driver for the market. They’ve fallen this year to record lows, increasing buyers’ purchasing power. The average rate on a 30-year home loan was 2.90% last week, according to data from mortgage buyer Freddie Mac. A year ago, the rate averaged 3.64%.