Total U.S. home sales soared in August, but a record crunch in housing supply sent prices surging. That is a fresh reminder that while the housing market is outperforming during the coronavirus crisis, good news for some comes with evidence of rising inequality and fewer opportunities for others.
The National Association of Realtors report released on Tuesday shows that the housing market, revived by lower mortgage rates thanks in part to the Federal Reserve’s easing of monetary policy, continues to serve as a bright spot, one that President Donald Trump can point to as proof the economy is healing after coronavirus-related lockdowns put millions out of work.
Incumbent presidents are generally helped at the polls by a strong economy, and hurt by a weak one.
The home ownership rate rose to 67.9% in the second quarter, up 3.8 percentage points from a year earlier and reaching its highest level in nearly 12 years, according to data released by the Commerce Department in July. But a crunch in housing inventory pushed the median existing home price to a record $310,600 in August, creating obstacles for first-time home buyers.
That is making it hard for some buyers to break into the market and could generate support for some of the housing policies that Democratic presidential candidate Joe Biden said he would pursue if he wins the Nov. 3 election.
Limited housing supply is a boom for homebuilders.
Single-family homebuilder confidence hit a record high in September and construction of single-family homes is rising, which could lead to the creation of more construction jobs – a welcome shift during a time of high joblessness. The U.S. unemployment rate was 8.4% in August.
Some 61% of construction jobs lost during the pandemic have been recovered, better than the rest of the labor market overall, which has recovered about half of the jobs shed.
Support from blue-collar workers proved instrumental to Trump in the 2016 presidential election, helping him win narrow victories in Pennsylvania, Michigan and Wisconsin.
Biden is courting the working class through proposals joebiden.com/housing/# that promise to provide financial assistance to people saving for down payments on homes, increase the housing supply and lower the prices of homes.
Trump has rolled back regulations passed by former President Barack Obama’s administration that were aimed at combating discriminatory housing practices and segregation.
Rules would have required communities that receive federal grants and housing aid to assess racial segregation in housing and offer plans to correct it.
With prices rising, some voters may be drawn to policies that could make home ownership more accessible. But others may not feel that any adjustments are needed.