US existing home sales near 14-year high

[WASHINGTON] US home sales surged to their highest level in nearly 14 years in August as the housing market continued to outperform the overall economy, though record-high home prices could squeeze first-time buyers out of the market.

The report from the National Association of Realtors confirmed the housing market had recovered after slumping when the economy almost ground to a halt as businesses were shuttered in mid-March in an effort to slow the spread of Covid-19.

Demand for housing is being fueled by record-low interest rates and a pandemic-fueled migration to suburbs and low-density areas in search of more spacious accommodation as many people work from home. Though the coronavirus crisis has left nearly 30 million people on unemployment benefits, joblessness has disproportionately affected low-wage workers in the services sector, who are typically young and renters.

Existing home sales increased 2.4 per cent to a seasonally adjusted annual rate of 6 million units last month, the highest level since December 2006. August's increase in homes sales, which marked three straight months of gains, was in line with economists' expectations.

The median existing house price jumped 11.4 per cent from a year ago to a record US$310,600 in August. Sales last month were concentrated in the US$250,000 to US$1 million and over price range, with transactions below the US$250,000 price band declining sharply.

Existing home sales, which account for the bulk of US home sales, jumped 10.5 per cent on a year-on-year basis in August. Sales increased in all four regions.

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REUTERS