Housing Market Update
Here is a summary of the recent housing market updates provided by Danielle Hale, chief economist at Realtor.com: Inventory of homes actively for sale is still low. There has been the occasional good week—the week of November 6, 2021, for instance, showed an uptick in new listings (up 5% over last year) for the first time in eight weeks. But total active inventory is still low (down 23% from a year ago). “With fewer than half as many homes actively for sale now compared to 2 years ago," writes Hale, "availability of for-sale homes is a pain-point for buyers, and it’s going to take more than one good week to make up the gap.” A growing number of homeowners plan to sell. Twenty six percent of homeowners surveyed by Realtor.com in September and October said they plan to sell their home in the next 12 months. Mortgage rates remain low. After slight increases in late summer and early fall, the week of November 6 saw the Freddie Mac fixed rate for a 30-year loan drop below 3% once again. This is good news for homebuyers struggling to navigate the high prices of the current housing market. Homes continue to sell quickly. “In fact,” writes Hale, “the speed has improved so much that every week since mid-March has had a lower time on market than the fastest-selling week in any year before this one.” Time on market has slowed slightly during the fall months, but buyers still need to be prepared to act quickly.
Forecast for the US Housing Market:
There will be a modest reduction in home sales year-over-year, but realize this is coming off of a high volume of sales in 2021.
After a record-breaking 16% increase in median price in 2021, economists predicts a 7% increase in median price year-over-year in 2022. This slow down in appreciation will be due to increased interest rates, affordability, and a slight increase in supply.
Housing starts will increase, but more importantly, construction completion will increase due to supply chain issues and labor shortages improving.
Interest rates will increase towards 4% as we travel through 2022, but will still be well below the 30 year average of 7.5%.
There will not be a housing bubble due to high demand for housing, job growth improving, and the overall recovery of the US economy.
Economists are not concerned about forbearance, but more so affordability for the aging millennial generation who would like to purchase their first home.
They sees the housing market moving towards more balance in 2022 after an incredible year of growth in 2021.
Overall, this is a positive outlook weighted with some real challenges that we still face as we recover from the global pandemic. It is always my goal to help keep my clients well-informed and empower strong decisions. Please reach out if you are curious about how the housing market relates to your goals.