A few key points:
1) This was the highest sales rate since 2006. Existing home sales are counted at the close of escrow, so the July report was mostly for contracts signed in May and June – when the economy was much more open than in the previous months. Some of the increase over the last two months was probably related to pent up demand from the shutdowns in March and April. However, with the high unemployment rate, the high rate of COVID infections, the increase in mortgage rates (still low, but up from recent lows) housing might be under some pressure later this year. That is difficult to predict and depends on the course of the pandemic.
2) Inventory is very low, and was down 21.1% year-over-year (YoY) in July. This is the lowest level of inventory for July since at least the early 1990s.
3) As usual, housing economist Tom Lawler was much closer to the actual NAR report than the consensus forecast. For July, Lawler forecast the NAR would report 5.85 million, and the NAR reported 5.86 million (almost exact). The consensus was 5.39 million.
This graph shows existing home sales by month for 2019 and 2020.
Note that existing home sales picked up somewhat in the second half of 2019 as interest rates declined.
Even with weak sales in April, May, and June, sales to date are only down about 5% compared to the same period in 2019.
Sales NSA in July (597,000) were 10.6% above sales last year in July (540,000).