The United States is on track for the hottest housing market since 2006.
According to the National Association of Realtors, the median existing-home price in November was $353,900 — a 13.9% increase since November 2020. Year-over-year home prices have therefore risen for 117 straight months — the longest streak on record.
“Determined buyers were able to land housing before mortgage rates rise further in the coming months,” NAR chief economist Lawrence Yun explained. “Locking in a constant and firm mortgage payment motivated many consumers who grew weary of escalating rents over the last year. Mortgage rates are projected to jump in 2022, however, I don’t expect the imminent increase to be overly dramatic.”
“Supply-chain disruptions for building new homes and labor shortages have hindered bringing more inventory to the market,” Yun added. “Therefore, housing prices continue to march higher due to the near record-low supply levels.”
The Wall Street Journal reported that demand is projected to remain high:
Housing has been one of the bright spots in the broader economy this year. Buyers have been motivated by low interest rates, higher household savings and a desire for more space to work from home. Demand also has been fueled by a large wave of millennials aging into their prime home-buying years…
The holiday season and cold weather in some parts of the country typically curtail home sales near the end of the year. But activity hasn’t slowed much in recent weeks. Buyers might have been in a rush to purchase before home prices rose further or interest rates ticked upward, said Doug Duncan, chief economist at Fannie Mae…
Demand is likely to stay strong next year, say economists and real-estate agents. People who are looking to buy a home but moved to the sidelines out of frustration are poised to return to the market if there is any sign of opportunity, agents say.
During an interview with Fox Business anchor Maria Bartiromo, Century 21 chief executive Michael Miedler made similar predictions. He said that the housing market is hot because “a lot of buyers are trying to rush in and beat any more increases in the mortgage rate.” He sees the market is “moving in a very kind of fast direction as folks have a lot of pent-up demand in trying to buy homes here in this country.”
Meanwhile, there is a low supply of new homes: “From the downturn that happened in 2008 to where we are at now, we are at historic lows on where folks are building.”
“Here is the truth of the matter; between 2012 and 2021 there were close to 12 million new household formations and we only put 7 million homes built in this country, so we have to double the pace in the next five years to catch up with the demand that’s out there,” he continued.
Amid the high price environment, government mortgage companies Fannie Mae and Freddie Mac will begin backing home loans nearing $1 million.