Housing Boom: Sales of Million-Dollar Homes Double

Enlarge this image

Sales of previously owned homes jumped more than 20% in September from a year earlier, but sales of homes costing more than $1 million more than doubled.

Justin Sullivan/Getty Images

hide caption

toggle caption

Justin Sullivan/Getty Images

Enlarge this image

National Association of Realtors

The Coronavirus Crisis
More Space, Please: Home Sales Booming Despite Pandemic, Recession

He worries that if the trend continues, the country will see a further «divergence in society where you have the haves, with homeownership gaining their equity, and those people who would like to become homeowners continually being frustrated, unable to reach that goal of owning a home.

Low interest rates are helping to drive sales and push up prices. But Yun says the biggest reason home prices are rising so fast is that there just aren’t enough homes on the market. Following the housing crash more than a decade ago, builders were building far fewer homes than usual. And that’s created record low inventories of homes.

The National Association of Realtors says there are fewer homes on the market today than it’s ever seen in records going back to 1982. And when a home comes on the market it doesn’t stay there long before it’s sold — an average of just 21 days, Yun says.

The Coronavirus Crisis
‘I’m Still Unemployed’: Millions In Dire Situation As Savings Start To Run Out

«That is the fastest ever recorded in our monthly series, he says.

In fact, a lot more homes would be selling if there was more inventory, says Mike Fratantoni, the chief economist for the Mortgage Bankers Association. «The primary constraint to even more sales is the plummeting inventory of homes on the market, which is leading to bidding wars and spikes in home prices across the country, he says.

«Fortunately, we are seeing a pickup in the pace of construction, he says, «which should bring more inventory onto the market for next year’s buyers.

Clearly though, for buyers where cost is less of an issue, sales are very strong. In fact, the more expensive the house, the bigger the increase in sales on a percentage basis.

Homes in the $100,000 to $250,000 range only saw a 4% gain in sales compared to a year ago, while sales of homes costing more than $1 million, more than doubled.

Yun says he’s never seen that happen before. But he thinks it shows that people with the resources to do it, «they are just going all in — buying bigger homes to help ride out the pandemic, sometimes in resort towns.

And the trend isn’t just among the superrich. Sales of homes between $250,000 and $500,000 saw a 36% gain from a year ago. But homes going for $500,000 to $750,000 saw nearly twice as big a percentage jump in sales.