Sales of existing homes soared 24.7% in July compared with June, according to the National Association of Realtors. These numbers represent closed sales, meaning contracts signed in May and June. 

That is the strongest monthly gain in the history of the survey, going back to 1968, and the highest sales pace since December 2006.

Sales were 8.7% higher compared with July 2019.

The increase in sales came as supply fell, prices rose and mortgage rates stayed low.

The supply of existing homes plummeted 21.1% annually, with just 1.5 million homes for sale at the end of July. This represents a 3.1-month supply at the current sales pace, down from a 4.2-month supply one year ago. It is the lowest July supply in the history of the survey, dating back to the early 1980s.

“The new listings are running a little higher than one year ago but all those new listings are being grabbed by the buyers and taken off the market,” said Lawrence Yun, chief economist for the Realtors.

That shortage drove the median price of a home sold in July up 8.5% annually to $304,100. This is a record high nominal price but also the highest price when adjusted for inflation. When adjusted, it is 3.4% higher than the bubble high set back in 2006. At that time mortgage lending was very loose, and borrowers could buy a home with no down payment and little to no financial documentation. 

“I think there is a big societal change concerning housing decisions today,” said Yun. “The upper income bracket has been more stable in terms of jobs, and they are taking advantage of record low mortgage rates.”

Low interest rates are adding fuel to home prices, as they give buyers more purchasing power. Mortgage rates spiked very briefly at the start of June but then fell back quickly. The average rate on the 30-year fixed mortgage hovered just above 3% for most of June before then falling below that in July. 

“Continued healing in the housing market is a positive for the overall economy, but elevated jobless claims raise concerns about how sustainable this housing demand is, especially in the face of rising prices,” said Danielle Hale, chief economist for realtor.com.

Sales of newly built homes jumped 14% from May to June, according to the U.S. Census. Homebuilder sentiment rose in August to the highest score in the 35 year history of the National Association of Home Builders’ monthly index. Builders are benefiting not just from strong buyer demand but from the severe shortage of existing homes for sale.