August saw a 2.4% increase in the sale of existing homes, according to the National Association of Realtors. Sales were 10.5% higher compared to August 2019, representing the highest sales pace since the end of 2006, before the Great Recession. In August it took only 22 days on average to sell a home, as well. That matched the fastest time to sell a home on record.
The primary factor putting a damper on real estate sales right now is a lack of supply. In 2006, when the home sales market was as hot as it is now, the supply was more than double its current level.
These staggering numbers are leaving analysts and real estate professionals wondering what could be next. It’s a time of uncertainty, with factors like the coronavirus pandemic and the presidential election seeming to weigh on every part of the economy except real estate.
The following are some predictions of what the rest of 2020 might hold for housing.
There May Be Some Slowdown Into Fall and Winter
The summer of 2020 saw soaring real estate activity. Some of this was because of pent-up demand, and there was also a lot of movement around the country as buyers wanted to escape cities and find homes with more outdoor and indoor space.
Shutdowns and the effects of the pandemic led many Millennials to make their way out of urban areas, so suburban areas and even rural areas saw much of the activity.
While some lost their jobs due to coronavirus effects, for those who didn’t, they felt confident to buy.
Now that summer has ended, we can expect real estate to likely return to levels closer to what we saw in 2019. Still robust, but perhaps not as frenzied. Economic factors will likely weigh on the real estate market more in the coming months.
Continued Demand to Refinance
Along with the demand to buy homes, there’s been a lot of demand to refinance homes. Mortgage rates remain historically low, and the Fed has signaled they’re likely to keep them this way for the foreseeable future. As such, it’s likely that refinance demand will stay strong for the rest of 2020.
There’s also a move toward more digital refinancing. What this means is that it’s you could get and close on a mortgage entirely online. It’s becoming an on-demand experience, like so many other things in our lives.
While the U.S. economy has fared better than many expected in the wake of the coronavirus, it’s possible that toward the end of 2020 we could start to see an increase in foreclosures. These foreclosures will begin on delinquent mortgages that may have been accumulating through the spring and summer.
While this is bad news for some, for others, it will be a buying opportunity at a time when inventory is low.
Home Prices May Keep Going Up, Although Perhaps More Slowly
By May, home prices were increasing by 3%. It’s possible that by the end of 2020, there could be a 4% growth rate in home prices, according to Lawrence Yun, National Association of Realtors’ Chief Economist. Even while prices will keep going up, it will probably slow somewhat through the end of the year.
Finally, one of the big questions many people have is whether or not the market will crash. There is a lot of uncertainty globally, but most economists don’t think a housing market crash is likely. It’s the record-low supply of properties that makes this fairly unlikely.