FOMO. Fear of missing out. It was a real thing in November and shows no signs of change any time soon, with real estate agents quickly submitting offers for clients as the uncharacteristic winter buying frenzy continues. Home purchases are going so strong, in fact, homes are going under contract within a month of being listed.
The National Association of Realtors (NAR) reports that sales have slowed slightly from the high levels recorded this past fall, not due to demand, but because of the shortage of inventory and fast-rising home prices.
According to Lawrence Yun, NAR’s chief economist, “It is important to keep in mind that the current sales and prices are far stronger than a year ago.”
Reports also show that pending home sales are still up 16.4% compared to a year ago, with all major regions posting double-digit year-over-year increases.
“The market is incredibly swift this winter with listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates,” Yun says, confirming that the NAR’s Pending Home Sales Index an all-time high, exceeding that of 20 years ago (2001). Yun predicts home sales to continue to perform strongly in 2021. He expects existing-home sales to increase by about 10% and new home sales to surge by 20% in the new year.
The equal-but-opposite-reaction may well be on the horizon, however.
“Economic growth is guaranteed from the stimulus package and from vaccine distribution, but high government borrowing will put modest upward pressure on interest rates,” Yun says.