The ebb and flow of the housing market is hard to predict. Unforeseen events, like the COVID-19 pandemic, can come along and ruin all of the experts’ projections and forecasts. However, there are also times when a forecast is based on data that is hard to deny. For example, a recent analysis found Americans are forming households at a lower rate than they did before the Great Recession. That means, younger Americans are living with their parents or roommates longer than they did in years past. In fact, according to the analysis, if the rate of household formation remained at pre-crash levels, there would be an additional 5.7 million households today. In other words, there are a lot of Americans who’d like a home of their own but haven’t yet been able to buy one. Combined with the number of Americans reaching, or now at, peak home buying age, the data makes a strong case that there will be pent-up interest fueling home buyer demand in the years to come, regardless of world events or market conditions. (source)
Archive for December 2020
Contract Activity Slows But Market’s Still Hot
During the time between when a contract to buy a home is signed and when the transaction is closed, the home’s sale is considered pending. The National Association of Realtors tracks pending sales because they’re a good way of forecasting future home sales numbers, since contract signings precede closings by several weeks. According to their most recent numbers, contract activity was down 1.1 percent in October from the month before, but remains 20.2 percent higher than it was last year at the same time. Lawrence Yun, NAR’s chief economist, says the market is still hot. “Pending home transactions saw a small drop off from the prior month but still easily outperformed last year’s numbers for October,” Yun said. “The housing market is still hot, but we may be starting to see rising home prices hurting affordability.” Home prices have been rising sharply in recent months, mostly due to the fact that there are fewer homes for sale but demand – motivated by low mortgage rates – is still high. (source)
