Some analysts think a pick-up in construction or an increase in for-sale listings as more people get vaccinated may help moderate surging home price growth in the second half of 2021, but the numbers are reflecting the opposite for now.
Median home-sale prices increased 20% year over year in April to an all-time high of $347,500, according to the National Association of Realtors (NAR). Listed homes spent less than 20 days on the market, the shortest time since 2012.
Despite fewer than half as many listings in May 2021 as compared to the year prior, there was a significant enough increase in April to slow the declining inventory, which may slow price growth eventually.
As for the overall economy, a soft April jobs report and a 4.2% jump in inflation did not rattle the stock market much, keeping bond prices, and mortgage rates, fairly stable.
With accommodative lending conditions still in place, investors appear to believe the narrative that inflation is short-term, and jobs are recovering. The Department of Labor reports new unemployment claims dropped significantly in April and May, though still running roughly 2-3 times above the level seen before the pandemic.
Consumers seem largely unaffected as well. Added funds from government stimulus appear to be working. Despite flat retail sales in April, the Conference Board Consumer Confidence Index surged 12.7 points to 121.7 for the month, the highest level since February 2020.
Real disposable income jumped 23 % in March, the largest monthly increase since 1959. After declining in February, the savings rate nearly doubled in March to 27.6%.
In early May, the Federal Reserve called the overall financial system “sound,” with household finances in shape, and corporations supported by an improving economy and low interest rates. Experts expect spending to improve.
Continued low interest rates are also good news for home shoppers, the majority of whom prefer lower monthly payments when choosing a mortgage.
NAR’s Pending Home Sales Index, which records contract signings of existing homes and typically leads closings by one to two months, rose 1.9% to 111.3 in April. Sales rose in every region except the Midwest.
Overall optimism in the housing market has reached near pre-pandemic peaks, bolstered by seller opportunities. Year over year, Fannie Mae’s Home Price Sentiment Index is up 16%.
Real estate records continued to fall during April. The average listing went under contract in 19 days, down from 35 days one year ago. About 45% of homes are under contract in less than a week. In another record, 48% of homes sold for more than their list price.
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