While much has been negatively affected due to the ongoing coronavirus pandemic, there’s one segment of the economy that has continued to thrive despite the surrounding challenges: the housing market. During the “Residential Economic Issues & Trends” forum, held during the National Association of REALTORS’® virtual 2020 Conference & Expo, Chief Economist Lawrence Yun stated the housing industry has exceeded expectations for 2020.
One of the biggest indicators of a healthy housing market is home sales, which have set numerous records this year. According to Yun, once the lockdown lifted earlier this year, people rushed to purchase homes—we are currently about 20 percent higher than we were last September in home sales.
“The housing market has been exceptional in 2020, with demand soaring alongside low interest rates and a shift toward remote work for a good number of the labor force,” Yun said.
Additionally, pending contracts are also up, implying that this winter may be one of the best for home sales activity, said Yun. However, the increased demand, along with an environment of low inventory, has come at a cost.
“The consequent rise in home prices have boosted wealth accumulation for homeowners,” Yun said. “But the opposite side of this will mean the continued decline of housing affordability and will limit future homeownership opportunities for young adults if housing supply is not greatly increased.”
What does the year hold? Yun forecasted 20 percent total growth in new-home sales in 2020, as well as a 3 percent overall increase in existing-home sales. For 2021, Yun predicts that new-home sales will jump 21 percent and existing-home sales will increase at least 9 percent. In terms of housing trends, Yun foresees “the second-order housing demand from remote work flexibility and changing housing preference will continue next year.”
Mortgage rates should hold relatively low, Yun said, with a 3.0 percent gain by the end of the year and a 3.1 percent increase in 2021. In terms of home prices, Yun expects them to increase by 6 percent by the end of the year, with an additional 3 percent increase in 2021.
“2020 has been a year of surprise,” said Yun. “Going through the pandemic, one of the biggest surprises this year has been the exceptional performance of the housing market.”
For more information, please visit www.nar.realtor. Stay tuned to RISMedia for continuing coverage of NAR’s 2020 REALTORS® Conference & Expo.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to ldominguez@rismedia.com.