Will the Housing Market Maintain Its Momentum?

Last week’s Existing Home Sales Report from the National Association of Realtors (NAR) shows sales have dropped by 3.7% compared to the month before. This is the second consecutive month that sales have slumped. Some see this as evidence that the red-hot real estate market may be cooling.

 

However, there could also be a simple explanation as to why existing home sales have slowed – there aren’t enough homes to buy. There are currently 410,000 fewer single-family homes available for sale than there were at this time last year.

 

Lawrence Yun, Chief Economist at NAR, explains in the report:

 

"The sales for March would have been measurably higher, had there been more inventory. Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising."

 

Yun’s insight was supported the next day when the Census Bureau released its Monthly New Residential Sales Report . It shows that newly constructed home sales are up 20.7% over the previous month.

 

Buyer demand remains strong. With more of the adult population becoming vaccinated and job creation data showing encouraging signs, existing-home inventory is expected to grow in the coming months.

What will this mean for home sales going forward?

Fannie Mae , Freddie Mac , and the Mortgage Bankers Association (MBA) have all forecasted that total home sales (existing homes and new construction) will continue their momentum both this year and next. Here’s a graph showing those projections:

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Bottom Line

Living through a pandemic has caused many to re-evaluate the importance of a home and the value of homeownership. The residential real estate market will benefit from both as we move forward.

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