With Inventory at Record Lows, Homes Are Selling Quickly

Dated: May 4 2021

Views: 73

Drazen / Adobestock

After two months of gains, existing-home sales declined by 6.6% in February. Yet, according to the National Association of Realtors (NAR), sales were still 9.1% higher than at this same time last year. What’s more, every sales region in the country posted year-over-year gains. According to Lawrence Yun, chief economist for NAR, “Despite the drop in home sales for February—which I would attribute to historically low inventory—the market is still outperforming pre-pandemic levels.” He warned that higher home prices and rising mortgage rates will affect home affordability, ultimately creating a slowdown in home sales growth. Yet, overall, Yun expects 2021’s existing-home sales to be ahead of 2020’s, what with the widening distribution of COVID-19 vaccines and a sense of normalcy returning to many areas of the country. “Many Americans have been saving money,” he stated, “and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”
Home Prices up More Than 15%
For the 108th month in a row, the median existing-home price increased; prices in February were 15.8% higher than last year. Prices for all housing types climbed in every sales region of the country. The newly released “2021 Home Buyers and Sellers Generational Trends Report” by NAR highlighted one key effect of the increasing prices: Buyers are struggling to save enough money for a down payment. According to Yun, affordability is weakening. “Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.”

Mortgage Rates Rising
Though mortgage rates remain near historic lows, rates are starting to climb toward levels not seen since the start of the pandemic. For the week ending April 1, 2021, the 30-year fixed-rate mortgage averaged 3.18%. In comparison, a year ago the rate averaged 3.33%. According to Sam Khater, chief economist for Freddie Mac, potential buyers are starting to take notice of the rising rates. “In fact, homebuyer demand has gone from 25% above pre-COVID levels at the start of the year, when mortgage rates hit record lows, to 8% above pre-COVID levels today.”

Available Homes Selling Fast
The lack of inventory is not helping to improve potential buyers’ confidence in the housing market. At the end of February, total housing inventory was down 29.5% from a year earlier. At the current sales pace, unsold inventory would supply the market for just two months, up from the 1.9-month supply in January but down from the 3.1-month supply in February 2020. The average property remained available for sale for just 20 days, down from 21 and 36 days a month ago and a year ago, respectively. Of all the homes sold in February, 74% were available for less than one month.

Regional Breakdown

Northeast - Existing-home sales annual rate of 770,000; a decrease of 11.5% from January 2021, but an increase of 13.2% from February 2020. The median sales price increased 20.5% from February 2020.

Midwest - Existing-home sales annual rate of 1.31 million; a decrease of 14.4% from January 2021, but an increase of 2.3% from February 2020. The median sales price increased 14.2% from February 2020.

South - Existing-home sales annual rate of 2.77 million; a decrease of 6.1% from January 2021, but an increase of 9.9% from February 2020. The median sales price increased 13.6% from February 2020.

West - Existing-home sales annual rate of 1.37 million; an increase of 4.6% from January 2021 and 12.3% from February 2020. The median sales price increased 20.6% from February 2020.

Blog author image

Adele Tamburo

*Loyal* *Beach Lover* *Yankees Fan* *Music Lover* *Book Lover* As your Realtor it is my job to take away all your stress and worry throughout each step of the process while buying or selling a....

Latest Blog Posts

Start the New Year by Getting Your Finances in Order

zatevakhin / AdobestockStarting a new year is the perfect time to review finances and set goals. Here are seven financial wellness tips to consider in the new year.Pay Off High Interest DebtBinging

Read More

Home Inventory Still Low, While Prices Continue to Climb

Song_about_summer / AdobestockBy the end of October, total housing inventory had fallen 0.8% to just 1.25 million units, according to the NAR. This was down 12% from a year ago, when there were 1.42

Read More

Here’s How to Protect Yourself from Phishing Scams and Identity Theft

Stock-Asso / ShutterstockPhishing remains one of the most significant cyber threats and hits everyone from individuals to Google and Facebook. It’s common because it’s lucrative; in,

Read More

Four Popular Trends in Kitchen Cabinets

Michael / AdobestockChanging your cabinetry can transform the look and style of your kitchen. New or repainted cabinets will quickly update your space and bring you the joy of expressing yourself in

Read More