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Economic Comeback Spurs Record Home Sales, Plummeting Mortgages

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Spurred by ultra-low mortgage rates, home buyers rushed last month to snap up a limited supply of existing houses, causing the pace of purchases to jump by a record-high 24.7 percent.

The July surge in sales reported Friday by the National Association of Realtors marked the second straight month of accelerating home purchases.

The back-to-back increases have helped stabilize the home buying market, which all but froze early this spring in the economic shutdown.

With July’s increase, to a seasonally adjusted annual rate of 5.86 million, purchases of existing homes are up 8.7 percent from a year ago.

Near record-low mortgage rates have made homes more affordable for buyers, and many are capitalizing on them.

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The average rate on a 30-year fixed rate mortgage is now 2.99 percent, mortgage buyer Freddie Mac said Thursday. A year ago, it was 3.55 percent.

In a few of the country’s most expensive housing markets — notably New York and San Francisco — real estate professionals say they’re seeing more people leaving high-priced city apartments to buy homes in outer suburbs.

Urban and suburban areas are showing similar strength nationwide, according to Zillow. Many suburbs are becoming hot home sellers’ markets, Zillow said, but so have many urban areas.

“There is some localized evidence of a softer urban market, particularly in the highest-priced markets, San Francisco and Manhattan … but no evidence of a widespread flight to suburban pastures,” Jeff Tucker, an economist at Zillow, said.

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In a pocket of southern Vermont, sales to out-of-state buyers, including from New York City, have surged, according to Janet Boyd, an agent in Wilmington.

In the past six weeks, Boyd said, she’s sold more than twice the number of homes that she did in the same period last year. About 80 percent of the buyers are from out of state.

In the midst of the recession, housing has emerged as a resilient sector of the economy.

An unusually sparse supply of homes is both helping fuel demand and keeping sales lower than they might otherwise be. The supply in July was down 21 percent from a year ago.

The result is that homes put up for sale are vanishing quickly.

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Homes were on the market for an average of 22 days in July, down by two days from June. And they are disappearing seven days faster than in the same month last year. The NAR said more than two-thirds of homes sold in July had been on the market for less than a month.

Economists say the aggressive buying reflects, in part, pent-up demand from the spring, when the usual surge in sales was blocked by the shutdown.

“A lot of people are making up ground for the lost spring home-buying season,” according to Odeta Kushi, an economist at First American, a title insurance company.

In the meantime, the shortage of homes for sale is boosting prices. The median price has topped $300,000 for the first time on record, settling at $304,100. That’s up 8.5 percent from July 2019.

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