[Croydon, 24-04-2023] Mortgage rates decreased significantly at the end of March, attracting more buyers to the real estate market. Although February marked a decrease in home sales prices compared to last year—the first time in over a decade—total home sales saw their highest monthly jump since July 2020. Despite this impressive growth, many economists are still uncertain about how far housing prices will drop throughout 2021.

Limited Supply

With the nation's housing supply in short supply, homeowners who have recently taken advantage of record-low interest rates are steadfastly staying put. As a result of scant inventory, prices remain unable to drop off; this situation is particularly difficult for first-time homebuyers trying to purchase homes due to affordability constraints.

Low Housing Inventory

After the 2008 housing crash, the construction of new homes drastically decreased and has yet to recover fully. As a result, the current housing inventory is at near-historic lows—and with no sign of improving by 2023. Compared to other downturns, this lack of supply has bolstered demand while sustaining higher home prices due to its staying power despite economic turmoil.

As the sales rate remains constant, unsold inventory stands at a 2.6-month supply, according to the National Association of Realtors (NAR). Although this is relatively low compared to historical standards, it has risen from 1.7 months in 2020 alone.

Market Forecast

According to the NAR, February's median existing-home sales price dropped 0.2 percent from a year ago, amounting to $363,000 and thus ending an astounding 131 consecutive months of price escalation. Simultaneously, total existing-home sales gained 14.5 percent between January and February. Yet, this surge was not enough, as it yielded 22.6 percent less than what had been seen one year prior.

The preliminary data from the U.S. Census Bureau and HUD reported a 9.8 percent increase in housing starts for February to aid with the much-needed inventory growth across America! Rates have also dropped significantly over recent weeks; Freddie Mac's figures show that mortgage rates stand at 6.32 percent, encouraging potential buyers to act while the market favors them!

Specialists have noted that homeowners today are much more secure than those affected by the 2008 financial crisis, with most possessing positive equity. Therefore, it is unlikely that there is to be another housing market crash.

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