Housing & Economic Update

Matthew came out with his first video for 2021 and it’s full of great information! If you don’t have time to watch the full video we have provided some highlights below.

Starting with The National Association of Home Builders report we can see that the index has slipped from 86 to 83, but builder’s still see the market conditions as favorable opposed to poor since anything above 50 is positive.

It is not surprising that builder confidence has trended lower over the past two months, between surging COVID-19 infections and increasing material costs. Lumber prices are up by 52% compared to a year ago! Builders are dealing with a lack of affordable lots to build on, material supply, and labor shortages. This is creating an upward pressure on new home prices, which slows demand as prices increase.

Regarding permits and starts, activity has not slowed. The number of single-family permits issued rose by 7.8% between November and December with an annual rate of 1.226 million units which is 30.4% higher that what we saw a year ago and it is the fastest rate we’ve seen since 2007.

Housing starts are 27.8% higher and have increased now for 8 continuous months. Starts refer to a lot with a foundation that has been poured. The current level of ground up construction is at its highest level since 2007. These numbers should continue to rise and these new homes should take some upward price pressure off the resale housing market.

Looking at the resale housing market and inventory, we are currently at 1.9 months of supply of inventory which is the lowest number of homes for sale on record. We haven’t seen this level of low since 1982.

The total number of homes that sold in 2020 was the highest level we had seen since 2006. No one could have predicted how COVID-19 would effect buyers and the housing market.

Overall, low supply and strong demand continue to increase home prices. Mortgage rates have dropped a full percentage rate lower than they were a year ago and home sales have stayed strong, even on the higher priced end of the market, which is keeping housing prices high.

In 2020 sales of single family homes rose by 6.3% and only rose by .05% in 2019. Prices were on the rise increasing by 9.2% last year which we haven’t seen since 2013.