Home Prices Jumped 5.9% in August, Which Explains Why Buyers Are Struggling

A mom, dad, and their daughter standing outside with their arms around each other and looking at their new home.

Image source: Getty Images

Mortgage rates have been remarkably low since the summer, and for that reason alone, many prospective buyers have clamored to purchase homes. They’re being tripped up, however, by soaring prices.

Home prices increased 5.9% nationally in August 2020, according to the CoreLogic Home Price Index, compared to a year prior. We have limited inventory to thank for that. The supply of available homes in August decreased by 17% from the previous year, leading to an uptick in demand and creating a housing market loaded with bidding wars as eager buyers compete to win contracts on the limited inventory.

The result? Many buyers are struggling to find homes, so they may not get to take advantage of the phenomenally low mortgage rates.

Is it worth it to buy a home today?

Locking in a mortgage at a low rate could result in a world of savings —

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U.S. New Home Market Cap Highest Since August 2006

The market for new homes in the U.S. is continuing its recent torrid pace. Based on the latest sales data reported by the U.S. Census Bureau, the preliminary nominal estimate of the market capitalization for new homes was $30.6 billion in August 2020.

Taking the trailing twelve-month average of the market cap for new homes to factor out seasonality in the data while factoring in data revisions in previous months, we estimate August 2020’s adjusted market cap to be $25.76 billion. In nominal terms, this is the highest this figure has been since August 2006, which can be seen in a chart showing the historical market cap data going back to January 1976.

Perhaps more remarkably, the median sale price of new homes sold in the U.S. fell to an initial estimate of $312,700 in August 2020. The initial estimate of the average sale price of a new home sold

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Condo Prices Climb 5.4% in August, Lagging 11.9% Growth for Single-Family Homes

SEATTLE, Oct. 2, 2020 /PRNewswire/ — (NASDAQ: RDFN) — Condo sale prices in the U.S. increased 5.4% year over year to a median of $266,000 in August, trailing growth in single-family home prices, which surged 11.9% to $343,000, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the largest price-growth gap between the two property types since 2014.

About one in five condos (21.9%) sold for above the price at which it was listed, up slightly from 19.2% in August 2019. That compares with one of every three single-family homes (33.6%), up from 24.3% a year earlier and the highest share on record.

“Home prices have been growing across all property types, as record-low mortgage rates have suddenly equipped Americans with more buying power. But condos have experienced relatively modest price growth because the coronavirus pandemic has motivated many homebuyers

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More Americans sign contracts to buy homes in August

SILVER SPRING, Md. — More Americans signed contracts to buy homes in August, suggesting the hot U.S. housing market will continue to churn well into fall.

The National Association of Realtors said Wednesday that its index of pending sales rose 8.8% to a record high of 132.8. An index of 100 represents the level of contract activity in 2001. It had sunk to a low of 69 in April, when buyers and sellers were sidelined as the coronavirus swept through the U.S.

US HOUSEHOLD WEALTH HITS RECORD DESPITE CORONAVIRUS PANDEMIC

Contract signings are a barometer of finalized purchases over the next two months, so this month’s numbers point to continued strong sales into October.

The housing market has been one of the highlights of the U.S. economy, which is still trying to get back

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More Americans Sign Contracts to Buy Homes in August | Business News

By MATT OTT, AP Business Writer

SILVER SPRING, Md. (AP) — More Americans signed contracts to buy homes in August, suggesting the hot U.S. housing market will continue to churn well into fall.

The National Association of Realtors said Wednesday that its index of pending sales rose 8.8% to a record high of 132.8. An index of 100 represents the level of contract activity in 2001. It had sunk to a low of 69 in April, when buyers and sellers were sidelined as the coronavirus swept through the U.S.

Contract signings are a barometer of finalized purchases over the next two months, so this month’s numbers point to continued strong sales into October.

The housing market has been one of the highlights of the U.S. economy, which is still trying to get back its pre-virus momentum. Contract signings are now 24.2% ahead of where they were last year, after falling

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August pending home sales soar to a record high

A sale pending sign is posted in front of a home for sale in San Anselmo, California.

Justin Sullivan | Getty Images

Pending home sales rose 8.8% in August compared with July, reaching a record high pace, according to the National Association of Realtors survey, which dates back to January 2001.

Sales were 24.2% higher than August 2019.

These sales track signed contracts on existing homes, not closings, so they are an indicator of closed sales in the next one to two months.

“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” said Lawrence Yun, NAR’s chief economist. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should, in the absence of inflationary pressure, keep mortgage rates low, and that will undoubtedly aid homebuyers continuing to enter the marketplace.”

Yun also noted that not

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Home Values Soar Even Higher In August As Inventory Tightens

Competition among buyers drove rapid sales and pushed values up while the rental market softened

– U.S. home values grew to $256,663 in August, a 0.7% increase from July. That’s the largest monthly increase since 2013.

– Low demand continues to push rents lower — typical rent dropped 0.3% from July to $1,771 in August, the biggest monthly decrease since 2017.

– Rapid sales further contracted inventory, which is now 29.4% lower than a year ago.

SEATTLE, Sept. 18, 2020 /PRNewswire/ — Pressure from this summer’s housing inventory shortage caused U.S. home values to rise sharply in August. They are up 0.7% from July to $256,663, the biggest month-over-month increase in nearly seven years, according to the August Zillow® Real Estate Market Report1. Home value growth accelerated last month in 48 of the 50 largest markets and was relatively constant in the other two: Birmingham, Ala. and Richmond

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US Housing Recovery Continues In August, New Home Sales Up 4.8%

New home sales were better than expected in the United States but the growth was not evenly distributed across regions


Olivier DOULIERY

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New US home sales came in well above forecasts in August with a 4.8 percent gain, as the housing market continues to recover from the coronavirus downturn, the Commerce Department said on Thursday.

August’s annualized rate of just over one million sales, seasonally adjusted, came after the upwardly revised annual rate of 965,000 sales reported in July and underscores how housing has managed to climb back from the hit taken during the Covid-19 downturn.

The growth was however not spread evenly, with month-on-month sales surging in the South 13.4 percent, and climbing 5.0 percent in the North, but declining slightly in the West and by a massive 21.4 percent in the Midwest.

“Home sales are well supported by solid demand and a favorable interest rate environment,”

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Sales of single-family homes recorded in Sonoma County for the week of August 16

One hundred and ten single-family homes sold in Sonoma County during the week of Aug. 16 ranging in price from $271,000 to $5.5 million.

Topping our list of real estate transactions this week was 1580 Castle Road in Sonoma which sold for $5,500,000 on Aug. 21. This five bedroom, six bathroom, 6,886 square foot residence featured a gourmet kitchen, great room, pool and a gentleman’s vineyard.

See what homes are selling for near you.

Cazadero

147 Magic Mountain Road, $271,000

12 Silvia Drive, $431,000

Cloverdale

108 W. Brookside Drive, $285,000

111 Douglas Fir Circle, $634,000

404 Clover Springs Drive, $720,000

227 Vista View Drive, $820,000

Cotati

8811 Poplar Ave., $1,216,500

Forestville

11870 Hillcrest Ave., $400,000

Guerneville

14543 Cherry St., $345,000

14918 Drake Road, $400,000

15356 Orchard Road, $451,000

14033 Woodland Drive, $816,000

Healdsburg

315 Second St., $1,450,000

Jenner

10637 Highway 1, $660,000

22165 Umland Circle, $782,000

Penngrove

2082 Curtis Drive,

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August New Home Sales Confirm That The Long Leading Housing Sector Has Been Surging

Introduction

Housing is a long leading indicator for the economy overall; i.e., it typically peaks over a year before the economy does as a whole, and is also usually one of the first sectors to rebound during a recession.

Thursday morning’s report on August new home sales certainly fit that mold.

Near-15-year high in new home sales is strong confirmation that the long leading housing sector has been surging

As I wrote last week, when housing starts and permits were reported, historically, interest rates have led housing sales and starts, which in turn lead prices, which in turn lead inventory.

Here’s the updated look at mortgage interest rates since the beginning of 2011, measured YoY, vs. single-family housing permits (the least volatile metric), also measured YoY:

Thursday morning the Census Bureau reported new home sales for August. There are two important facts about new home sales:

1. They are the

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