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Housing Market Forecast 2020
As forecasted, the housing market continues its spectacular recovery through the summer of 2020 into August. After June and July’s improvements, and August’s initial data, we’re looking at a sunny outlook for home sales and prices in September, October and November.
NAR’s Housing Market Recovery Index rose 1.8 points last week reaching 106.6 nationwide. This is 6.6 points above the pre-COVID baseline. See all the stats and charts below from NAR, Statista, Yahoo, Census.gov, St Louis Fed, and other data sources.
The demand/supply imbalance is the key source of rising prices. NAR housing demand index reached 124.1 while the housing supply index fell back to 95.5. 44 markets have recovered as of this week including Las Vegas, Seattle, San Jose, Denver and Los Angeles.
NAR’s new report for July shows national sales growth of single-family homes, townhomes, condominiums and co-ops, lept 24.7% from June’s to a new sales total 5.86 million homes in July. Considering the current state of the economy, these sales numbers will make Realtors feel giddy. See the Florida, New York, and California housing market updates.
Existing Home Sales Rebound
July’s 24.7% sale leap is on top of June’s big jump of 20.7% is above sales in first two months of 2020. That leads support to big predictions for 2021 sales.
Lawrence Yun, NAR’s chief economist said “The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days. With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
According to NAR/Centriloc surveys, home showings rose in all regions except the west. Combine with pending sales data, foot traffic says a lot about where the housing market is headed.
See more on housing data for major metros including Denver, Dallas, Houston, Manhattan, Seattle, Boston, New York, Los Angeles, San Francisco, San Diego, Miami, Tampa, Atlanta, Philadelphia, Sacramento, Malibu, Chicago and Los Angeles. Check the state outlooks for Illinois, New York, California and Florida.
Fewer Houses for Sale
Yes, despite what’s ailing the US economy and employment levels, the real estate market is in a whole other world, and enjoying low mortgage rates. The only problem is fewer houses for sale, and new construction may not be keeping up. That means higher prices for homes for sale.
Median home prices rose in all regions in July. The median existing-home price2 for all housing types in July was $304,100. That was a 8.5% jump from 12 months ago ($280,400), and up from June’s price of $295,300.
When the economy does get back on track next spring, we can see monumental price growth as more people dive into home ownership.
Total listings for sale fell 2.6% to 1.50 million units, down 21.1% from one year ago (1.90 million). Unsold inventory is down to 3.1 months supply and to 4.2-month supply in last July 2019.
Low mortgage rates and limited inventory won’t be changing anytime soon, giving market pessimists little fuel for their housing market crash scenarios.
First time buyers accounted for 34% of purchases, down 1% from June.
Doomsday sayers suggest a foreclosure boom on TV, however distressed sales (foreclosures and short sales) made up less than 1% of sales in July (down from 3% in June).
Homeowners are becoming more equity rich.
Homes and Prices Rise
Single Family home sale rose 19.9% more than May’s sales totals to a rate of 4.28 million in June. The median price for a house for sale rose 3.5% from last year. which condo prices rose 1.4% vs last June. Condo, apartment and coop sales rose 29.4% from last month, a surprising statistics given the Covid 19 concerns.
The growing desire to migrate to suburban and rural areas could draw more home sellers into the real estate market. They’ll be using huge cash reserves, bit home equity, and perhaps money from the stock market. However, with cities to move to, it is difficult for homeowners to commit to selling.
Hottest Zip Codes: Home Price Rises and Views
NAR just released its list of hottest Zip Codes in the US.
Home sales rose in the Northeast (+30.6%) and prices rose 4% to $317,800). Home sales in the Midwest rose 27.5%, and saw median home prices rise 8% to $244,500. Sales of homes in the South rose 19.4% and saw prices go up 9.9% to a median average of $268,500. And home sales in the West picked up 30.5% and had a new median price of $453,800, which was up 11.3%.
NAR Realtors are reported a solid growth in confidence about the housing market. In July, the confidence index rose again to 71, up from 64 in June and from 50 in May. Realtors are reporting more offers on homes, with fewer showings than in May, and that listings are growing.
The RCI Seller Traffic Index rose 4 points to 40. The percent of Realtors surveyed who expect more buyer traffic in next 3 months rose to 46. And the expected increase in seller traffic remained at 42. Realtors feel prices will cool off from their hot, believing that home prices will only rise 1.3% to next July 2021.
Buyer traffic is reported as strong across most US states with most activity in South Carolina, West Virginia, New Jersey, Connecticut, North Dakota, Michigan, Montana, Vermont and Nebraska. Top selling activity states were North Dakota, Wyoming, Vermont,Nebraska, and Mississippi.
Housing Supply Chart
New Home Sales Jump
Sales of new single-family houses in June 2020 rose 13.8% above the May sales rate to 776,000 homes.
This is 13.8 percent above the revised May rate of 682,000 and 6.9% up from June 2019 total new construction sales of 726,000 units. The median sales price of new houses sold nationally rose to $329,200.
New home sales are a leading indicator, and home buyer intent is rising. Experts predict that we’re at the beginning of a cyclical upsurge (in the stock market too).
Forecast is for Lower Mortgage Rates
Freddie Mac has some good news with mortgage rate forecast. Rates will decline. After the Feds injected $3 trillion into the economy, homebuyers are getting another boost in low mortgage rates. and a lot of debt and mortgage refinancing has been taking place.
Bottom line is that real estate is an even more precious asset which a decreasing number of buyers can afford.
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The New Mortgage Environment
Mortgage debt has fallen to the lowest level since 2003 according to the St. Louis Fed.
In a news release, the The Mortgage Bankers Association’s reports the total number of loans in forbearance fell by 23 basis points last week. The rate fell from 7.44% of servicers’ portfolio volume in the prior week to 7.21% as of August 9, 2020. 3.6 million homeowners are in forbearance plans according to MBA.
Zillow reported that close to 4 million mortgages are in forbearance. 7.3% of all mortgagees couldn’t pay their mortgage. This could tighten up lending rules. Buyers may want to intensify their home search before that worsens.
Yahoo reports that mortgage refinancing has hit a 7 year high, as homeowners look to lower payments or get a grace period of some kind.
There are reports that mortgage rates might fall to a record low 3.1%. MBA says refinance loans rose 225% — which is three times the rate of one year ago.
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Now that business is reopening slowly, the market will have a little jump from latent demand and continue an upward trend in houses for sale too. The big worry is that we’ll see a second wave of Covid 19 infections. Let’s hope the government gets tough on hygiene, social distancing offenders, otherwise, given some people’s behavior, a second wave looks likely.
Although the stock markets have been trending up, unemployment and GDP drops are severe. The uncertainty of the Corona Virus period will suppress home sales. Higher unemployment, layoffs of high paid workers, and shut down of the travel industry are 3 key factors that will result in lower home and condo sales, and perhaps for the first time, lower home prices.
Many Americans will soon be on their own without Fed assistance and facing back rent and overdue mortgages. Cities such as Denver, Dallas, Houston, Las Vegas, Tulsa, Seattle, Boston, New York, New Jersey, Chicago and Los Angeles may see some new home listings out of the distressed market, but not as much as some fasters are predicting.
Housing Market Forecast: Looking for specific data related to the Dallas housing market, Los Angeles real estate market, New York real estate market forecast, Atlanta real estate market, Seattle real estate forecast, Chicago home sales projections, Philadelphia home sales report, San Diego County real estate update, Miami condo market, Boston housing market, Bay Area housing forecast, Tampa Sarasota housing outlook, Denver housing outlook, and Houston housing market predictions?. See forecasts for California housing, and Florida housing markets.
Mortgage rates will fall as the Fed lowers the key rate which opens up big mortgages for Millennials buyers. NAR as part of its February housing market report said: According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.47% in February. This dropped from a 3.62% rate in January. The average commitment rate across all of 2019 was 3.94%.
The 5 to 10 year price forecast is upward reflecting a downward availability of homes and intense competition. And the 2021 housing forecast look solid. The question buyers have right now is whether the stock markets will hold up. Jobless claims in California are scary, but the Covid 19 pandemic will pass.
NARs Realtor survey has been released. It’s got some good insight for buyers, sellers and Realtors alike.
Continue to US Housing Market Forecast Part 2
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Housing Market Forecast – copyright Gord Collins
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