Many analysts currently describe the housing market as overheated. Due to a growing demand that exceeds supply, home prices keep reaching record highs.
Rising Prices
Two years ago, before the COVID-19 pandemic, only 25% of properties were selling above asking, according to data collected by Redfin.
Now, most recent data shows that home prices rose at their fastest pace in nearly seven years in March.
In March, the S&P CoreLogic Case-Shiller 20-city home price index went up 13.3% from a year earlier, which is the biggest percentage increase since December 2013. The increase follows a 12% increase in February.
There are many homeowners who are unwilling to sell, resulting in bidding wars. The number of homes for sale in the United States reached 1.6 million at the end of April. This is a decline of 20.5% from the previous year.
In addition to high building materials costs, labor and land costs are also soaring. In April, new home construction fell after an earlier 15-year high.
Added to this is the 30-year fixed mortgage rate, which is currently at a 50-year low.
Demand is being influenced by a variety of factors, which include the pandemic's effects. It appears homebuyers are still seeking suburban homes and leaving apartments.
Others think we're seeing an acceleration in buying patterns that would have happened regardless, just not all at once.
A National Association of Realtors report shows a median price increase to $341,600 in May. It is also interesting to note that there are more agents than there are properties available for sale.
Will It Slow Down?
There's a possibility that the housing market will slow down this summer.
One big reason is the rate at which vaccinations are occurring in the U.S. The number of people getting vaccines might mean that they will spend more on entertainment and vacation. It could take some of the attention away from homes and the housing market.
In fact, the number of people who signed a home purchase agreement fell in May, and there was a decrease in mortgage applications. Almost 6% fewer new homes were sold in April than in March.
The best thing newcomers to the market can hope for is some sort of pricing stability. Home prices aren't likely to decline significantly anytime soon, but they could even out slightly.
Don’t let these higher home prices discourage you if you plan to buy a home in Berks County. With a little extra work and patience, you can still find the ideal home. Give us a call today to see how we can help you realize your home buying goals.
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