Traditionally, the real estate market begins to take a breather over the holidays. But 2020 is a year that nothing is traditional. Housing Wire’s Julia Falcon reports that low mortgage rates paired with record-low housing inventory have driven home price through the roof, with the National Association of Realtors saying that the median single-family home price grew year over year in all 181 metro areas it tracks.
“In the U.S., median existing single-family home prices rose 12% year over year to $313,500,” NAR said. “In 117 metros, there were double-digit price gains from one year ago. For added perspective, in Q2, only 15 metro areas had double-digit price gains.”
When asked how to remedy this craziness, NAR Chief Economist Lawrence Yun responded by saying that the answer is finding a solution to the housing inventory crisis. Falcon says that by the end of Q3, 1.47 million existing homes were available for sale, which is 19.2% lower than the total inventory at the end of Q3 last year. As of September 2020, there were enough homes in inventory to last 2.7 months at the current sales pace.
“As home prices increase both too quickly and too significantly, first-time buyers will increasingly face difficulty in coming up with a down payment,” Yun said. “Transforming raw land into developable lots and new supply are clearly needed to help tame the home price growth.”
“Favorable mortgage rates will continue to bring fresh buyers to the market,” said Yun. “However, the affordability situation will not improve even with low-interest rates because housing prices are increasing much too fast.”