Shelter-in-place orders triggered a massive halt to our economy. Many experts predicted residential housing was sure to follow. Several analysts estimated that homebuyer demand would vanish, and for the first time in close to 10 years, home values would depreciate. However, these forecasts did not come true, and now, we’re seeing the opposite happen.
After the initial shutdown, the housing market bottomed out immediately. That slump was temporary.
Today’s real estate market hasn’t just bounced back — it appears to be picking up speed. The National Association of Home Builders (NAHB) and the National Association of REALTORS® (NAR) published two recent reports that provide proof of this mounting strength.
Housing confidence reaches all-time high among builders
The Mortgage Bankers Association (MBA) confirmed that homebuilders’ new purchase applications were nearly 40-percent higher in July 2020 compared to July 2019. Builder confidence is booming.
Every month, the Housing Market Index is released by the NAHB, a survey of its members rating the market conditions supporting new home sales presently and projected for the next six months. The member survey also gauges prospective new build buyer traffic.
The report for last month showed that builders’ market confidence for newly-constructed single-family homes rose to its highest point in the 35-year member survey.
According to Chuck Fowke, NAHB Chairman:
“The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs… Housing has clearly been a bright spot during the pandemic. The sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020.”
Bottom line: The amount of newly-built houses being constructed this year will almost match last year’s levels. This is even after the economic shutdown derailed homebuilding earlier in the year.
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Realtors see existing homes zoom off the market
The second report, NAR’s Existing Home Sales Report, also recently revealed that month-over-month sales saw a record 24.7-percent increase.
As The Wall Street Journal states, this unexpected spike crushed experts’ previous estimates:
“Economists surveyed by The Wall Street Journal expected a 14.2-percent monthly increase in sales of previously-owned homes, which make up most of the housing market.”
Year-over-year, there’s been an 8.7-percent home sales increase.
Lawrence Yun, NAR Chief Economist, explains why home resales are just as hot right now as new builds:
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days. With the sizable shift in remote work, current homeowners are looking for larger homes. This will lead to a secondary level of demand even into 2021.”
Likewise, Realtor.com’s monthly Housing Market Recovery Indexreflects a housing market that’s rapidly recovering. The latest index of 104.8 indicates that the current housing market is stronger than it was in January and February 2020. For reference, the index hit its highest point of 106.5 in early March, right before the onset of the health crisis.
Bottom line: Numbers for existing home sales and new construction markets are both exceeding those from the year before. Real estate has returned, with greater affordability for homebuyers and strong opportunities for sellers.
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For educational purposes only. Please contact a qualified professional for specific guidance.
Sources deemed reliable but not guaranteed.