The Housing Market is Rushing Back
The Housing Market is Rushing Back
Existing home sales in July were record-breaking for the second month in a row. Economists feel that this means the housing market is back. In June, the nation saw a 20.7 percent increase in home sales, and July’s was 24.7 percent.
You may remember that before the COVID 19 pandemic, home sales were at record levels. In July, the pace of growth was the highest since December of 2006. At this pace, that would mean 5.86 million home sales annually, according to a report from Nationwide Mutual Insurance Company.
Since the height of the shutdown, 9.3 million jobs have been added to the economy, low mortgage rate still at record lows, and more people are looking for homes than there are homes to sell nationwide.
While the current growth rate in the housing market is probably unsustainable, in the long run, it may increase in the coming months due to pent up demand for housing and an improved economic outlook.
One trend to watch is a potential migration away from cities to more suburban and rural locations. The pandemic is allowing for work-from-home jobs to become more permanent. The result is that people, for the most part, no longer need to be as close to their place of employment as in the past.
One item that is limiting growth in the housing market is a shortage of available existing homes to sell. Available homes for sale are close to an all-time low. New home construction is up and most significantly in multifamily units, which had the highest growth in 10 years. New construction, however, will not alleviate the housing shortage completely as housing contractors are not able to keep up the pace of demand.
All of this means that home prices for existing homes should increase in the foreseeable future. The only gloomy spot on the horizon is the recent jump in mortgage delinquencies. The COVID pandemic has put many Americans out of work. How quickly we have a vaccine and how rapid Americans receive the vaccine may be a deciding factor in the overall economic health of the United States of America and the housing market in particular.
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