2021 Housing Market had a strong first half due to low-interest mortgage rates and increased home values. So what is in stock for the second half of the year?
Mortgage Rates will slightly increase but will stay low
The latest Quarterly Forecast from Freddie Mac states:
“We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”
Rates remaining low will give purchase power for homebuyers.
Freddie Mac states, "While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”
Home Values Hold but Slow Price Growth
Joe Seydl, Senior Markets Economist at J.P. Morgan says, “Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six to nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
The graph below reflects the optimism felt by other experts:
Inventory is low, but there is still reason for optimism
Home prices are still on the rise, but inventory may increase and cause prices to moderate. George Ratiu, Senior Economist at realtor. com says, “We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”
As new home construction improves, which gives hope for options. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB) states, “As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.”
Our improving economy is another factor of hope. Mark Fleming, Chief Economist at First American, writes, “A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.”
High house price estimates, low-interest rates, increase in inventory and home sales keep experts optimistic for a great second half of 2021.
Contact The Aaronson Group for your real estate needs during these historic times. Call 949-388-5194 or email firstname.lastname@example.org