Highlights From This Year’s Housing Market Reports

As the year comes to a close, it’s time to take a look back at the housing market and see how it has fared. From rising interest rates to the impact of the pandemic, 2020 has been a year of ups and downs for the real estate industry. With housing market reports from various sources, we have gathered the most significant highlights to give you a comprehensive overview of what has happened in the housing market this year.

Housing Market Stability During the Pandemic

The pandemic hit the housing market hard, causing a lot of uncertainty and volatility. However, despite the economic downturn, the housing market remained surprisingly stable. Thanks to historically low-interest rates, buyer demand remained high, and the real estate market was able to bounce back quickly.

Record Low Mortgage Rates

One of the major reasons for the resilience of the housing market in the face of the pandemic was the record-low mortgage rates. The Federal Reserve slashed interest rates to nearly zero in March to stimulate the economy, which had a direct impact on mortgage rates. By the end of December, mortgage rates had fallen to an all-time low of 2.67%, making it an ideal time to buy a home or refinance an existing mortgage.

Rising Demand for Homes in Suburban and Rural Areas

The pandemic has also had a significant effect on where people want to live. With the rise of remote work and the need for more space, there has been a shift away from big cities and towards suburban and rural areas. According to the National Association of Realtors, 48% of homebuyers purchased homes in suburban areas, while only 28% opted for urban areas.

Impact of Low Housing Inventory

While buyer demand remained strong, the supply of homes for sale was limited, resulting in low housing inventory. As more people decided to move, the supply of homes could not keep up with the demand. This has resulted in a highly competitive market, with homes selling quickly and often above the asking price.

New Construction on the Rise

To help combat the low housing inventory, new construction has been on the rise. According to the U.S. Census Bureau, housing starts, and building permits have increased by 14.2% and 5.2%, respectively, from October to November. This increase in new construction is good news for buyers and may help ease the pressure on the housing market in the coming months.

Increase in Home Prices

The combination of high demand and low housing inventory has caused home prices to increase significantly. According to the Federal Housing Finance Agency, home prices rose by 7.8% in the third quarter of 2020 compared to the same period in 2019. This is the largest year-over-year price increase since 2006, before the Great Recession.

Outlook for 2021

As we look towards the new year, there are some projections for what we can expect in the housing market. The National Association of Realtors predicts that existing home sales will increase by 21% in 2021, while home prices will rise by 8%. Additionally, mortgage rates are expected to remain low, with a slight increase to an average of 3.1% by the end of 2021.

Potential Challenges for the Housing Market

Although the housing market has been relatively stable in 2020, there are still some potential challenges on the horizon. If the pandemic continues to worsen, it could lead to a slowdown in the economy, which could have a negative impact on the housing market. Additionally, the expiration of the foreclosure moratorium and mortgage forbearance programs could result in an increase in foreclosures and distressed properties in the market.

Positive Factors for the Market

On the other hand, there are also positive factors that could contribute to a strong housing market in 2021. The rollout of the COVID-19 vaccine and potential stimulus packages could help boost the economy and increase consumer confidence. The continuation of remote work and the desire for more space may also drive demand for homes in suburban and rural areas.

In conclusion, the housing market has proven to be remarkably resilient in the face of a global pandemic and economic uncertainty. With low mortgage rates, shifting buyer preferences, and an increase in new construction, the market has remained stable. As we look towards 2021, there are both challenges and potential opportunities for the housing market, making it an interesting one to watch.