In the midst of the volatile economy riven with uncertainty because of the coronavirus, there is some welcome news from the housing market. Home sales are a bright spot in the pandemic because existing home sales in the summer were the highest in almost 14 years, at an annual rate of nearly six million home sales, as reported by the National Association of Realtors.
The Census Bureau reported the annual rate of 900,000 new home sales, the highest since the end of 2006 before the start of the Great Recession. About a third of these families were buying their first houses, making that decision in the midst of a rough downturn. While sales certainly fluctuate from month to month, we have witnessed a steady upward trend that has continued despite the pandemic. But this news is only part of the story.
The Census Bureau noted the highest rate of homeowners at 68 percent since 2008. In our national conversation about race, there are indications that this trend benefits minority homeowners. It is certainly true for black households, whose rate of homeowners is now the highest in 12 years. For hispanic households, the news is even better. Their rate of homeowners is the highest in 45 years, which is a record since the Census Bureau started to collect information on this group. This progress is worth celebrating.
For the fallout from the Great Recession, the national rate of homeowners decreased and bottomed out after eight years. Since the end of 2016, the trend has reversed as the rate of homeowners has now increased without much fanfare. Further, home prices have been on the mend, which means homeowners are growing their wealth. Those families who purchased over the last four years have enjoyed more value and equity in their homes.
The median price for existing homes sold this summer hit a new record of more than $300,000, according to the National Association of Realtors. A year ago, the median price was at about $280,000, which means families who purchased homes last summer have added about $24,000 over their net worths since then. Two years ago, the price was about $270,000, and families who purchased then are richer by around $34,000. Over the last three and a half years, the median price has risen by about $60,000.
For new homes, the median price is more than $330,000, an increase for $23,000 for families who purchased their homes last year, almost exactly the same as the increase with buyers of existing homes. For most families, their homes are their most important assets, and the value for such assets has been on the rise despite several crushed sectors of the economy.
Finally, in the last three and a half years, the country has added 10 million homeowners, as four million of them are minorities, including one million black families and almost two million hispanic families. We not only have near record home sales, although that by itself is strong for the economy, but we also have many homeowners who are starting the critical process of fulfilling a traditional American dream and building their wealth that is often a source of prosperity between generations across the country.
These real estate values provide some security to homeowners over what promises to be a volatile economy that restructures after the coronavirus. Homeowners are likely to see their assets continue to rise, and that could mitigate uncertainty or offset other setbacks in their lives like in their jobs. While this might be a small consolation for people who are unemployed in the downturn, this is encouraging about the prospects with recovery.
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