US existing home prices shot higher in August amid surging demand as more consumers sought housing to adapt to working from home, a survey released Tuesday said.
That put the squeeze on inventory, which continued to dip as median prices climbed after breaching the $300,000 level for the first time ever in July.
The National Association of Realtors (NAR) said sales rose 2.4 percent from July to a seasonally adjusted annual rate of six million, in line with analysts' expectations and the highest level since 2006.
Existing home sales took a dive earlier this year as the coronavirus pandemic snarled business across the country. August was the third straight month of growth, boosted by the shift to work-from-home by many professions, as well as the Federal Reserve's move to keep interest rates low.
"Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market," NAR chief economist Lawrence Yun said, adding "further gains in sales are likely for the remainder of the year" due to low interest rates and increased rehiring of laid-off workers.
Growth was seen in all regions, with the Northeast, home to the worst initial covid-19 outbreak, climbing the most at 13.8 percent. Overall, sales last month were 10.5 percent higher than August 2019.
However total inventory declined 0.7 percentage points from July to 1.49 million units and unsold inventory sits at a three-month supply, compared with a four-month supply a year earlier.
Median home prices jumped 11.4 percent from a year earlier to $310,600, and Joel Kan of the Mortgage Bankers Association warned that gain "is far above income growth and threatens overall affordability -- especially for first-time buyers."
"It's clear that more inventory is needed to keep home prices from rising too quickly," he said.
Even with mortgage rates at low levels, Ian Shepherdson of Pantheon Macroeconomics predicted reticent bankers would take some of the wind out of the housing market's sails in the last months of the year.
"Tightening of lending standards in recent months appears already to be crimping applications, so sales likely will peak around the year-end," he said.