Defying high unemployment and an economic recession, the housing market has surged during the COVID-19 pandemic. That isn’t likely to let up heading into the winter months, said Lawrence Yun, chief economist of the National Association of REALTORS®.
“This winter may be one of the best winters for sales activity,” Yun said. “It won’t match summer or spring sales numbers, but on a winter-to-winter comparison, this could be one of the best breakout years just based on the fact that pending contracts are at such a higher level.”
Mortgage applications also are up 20% year over year, which reflect buyers in the pipeline that have been approved for mortgages and are ready to buy. Home prices are up too.
What’s next for 2021? A persistent housing shortage will likely keep home prices elevated, while new- and existing-home sales will continue to rise as record low mortgage rates and a work-from-home trend give housing markets a boost, Yun said. Low mortgage rates are key against higher prices: One major factor contributing to the hot housing market has been record-low mortgage rates, under 3%, said Yun. He predicts rates will continue to stay low into 2021. Mortgage rates are helping housing affordability balance against rising home prices.
Here’s Yun’s forecast for the housing market heading into 2021, and how it fares against his 2020 end-of- year forecast: