In 2020 Americans saw historically-low mortgage interest rates, brisk home sales with low home inventory in many markets, and bidding wars.
But what kinds of housing market conditions can homebuyers and sellers expect this year? Here are three big predictions compiled by Homes.com. House flippers, we’ve summarized them for you here.
Home prices that rise by nearly 10 percent
In a mid-December National Association of Realtors (NAR) survey of housing and economic experts, the experts reached a consensus that home prices will increase by 8 percent this year. This bodes especially well for house flippers.
An increase in mortgage rates, but still historically low
The 2021 housing market may usher in the end of mortgage interest rates below 3 percent. The Mortgage Bankers of America’s (MBA) forecast for 30-year fixed-rate mortgages predicts that rates will rise to 3.3 percent by year’s end. By the fourth quarter of 2022 they expect rates to reach 3.6 percent.
During a forecast summit hosted by NAR in December, 20 leading economic experts agreed that 30-year fixed mortgage rates will hit 3.25 percent this year.
New home sales that increase, but won’t keep up with demand
In November new home sales were almost 21 percent higher than the previous year, and single-family homebuilding reached its highest level since April 2007, but this year experts don’t believe sales will keep pace with demand.
Fannie Mae’s chief economist Doug Duncan had this to say: “The new home sales numbers had a big jump in 2020, and there will be more growth in 2021, but they’re going to have to rebuild that inventory because anything that the builders are building today gets sold.”
Mark Fleming, a chief economist at First American, a title insurance company, said, “Despite the best intentions of home builders to provide more housing supply, the ‘big short’ in housing supply will continue into 2021 and likely keep house price appreciation flying high.”
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