Here’s the latest news and notes on our national real estate market.
The real estate market has continued to soar in the early weeks of 2021. Prices are still climbing, but how much higher can they go? Your window of opportunity in this market could be shrinking, so here’s what you need to know right now:
First off, mortgage demand dropped slightly. Sharp gains in home prices and a slight rise in interest rates combined to weaken demand for mortgages in the middle of January. Though mortgage applications fell by about 4%, they’re still 16% higher than they were at this time last year.
The average loan size across the country also hit a record high of $395,000, but interest rates remain below 3%. Now, even with decreased demand, the market is still in a fantastic spot because existing home sales are up, but new listings are down anywhere from 30% to 40% nationwide. Demand for homes driven by the pandemic resulted in home sale numbers that we haven’t seen since 2006. To be exact, 5.64 million units sold last year—much higher than experts’ original pre-pandemic predictions.
Even with record-high demand and sales, low inventory dampened our potential a bit. While existing home sales are strong, new construction sales have taken a dip. Why’s that? Builders are less optimistic right now due to higher building costs.
Just a few months ago, homebuilder confidence was at an all-time high. Again, the pandemic-driven buyer demand resulted in more people choosing to build new. However, builder confidence fell three points in January as the cost of lumber rose. Builders are dealing with supply-side constraints, a lack of affordable lots, labor shortages, and all kinds of other issues that are putting upward pressure on home prices. This means that new homes are becoming even more expensive and taking longer to build.
What does all of this mean for you? Well, as long as demand remains strong and inventory stays low, home sellers are in a stellar position in our market. With these kinds of conditions, a quick sale with multiple offers is more of the norm than the exception.
With low mortgage rates continuing to fuel demand, an increase in rates could lead to an increase in inventory and a decrease in prices. Thankfully, however, I’m quite confident that we’re a long way from there.
If you have any questions about selling your home and trading up on the market, feel free to give me a call or send an email. I’m always happy to hear from you, and I’d love the opportunity to learn more about your specific buying or selling needs. Together, we can work out a plan that makes the most sense for you and your family.
