The Housing Market One Year into the Pandemic
A Quick Review
It has been just over a year since the COVID-19 pandemic altered innumerable aspects of daily life. Home sales all but dried up when the pandemic first set in. Sales of existing homes tumbled nearly 18% between March and April and an additional 10% between April and May.
Then a few months later, there was a surge in demand for houses as interest rates dropped and people looked for more space to work and social distance at home. Existing home sales soared almost 21% in June.
Soaring Home Prices
The spike in demand for housing came at a time when the supply of homes was fairly low. The homebuilding industry was still recovering from being battered by the Great Recession. Many people who already owned homes were reluctant to sell. This caused home prices to climb.
In January 2021, home prices were up more than 10% year over year. In some parts of the country, such as Seattle, Phoenix, and San Diego, the price jumps were even more significant. Home prices are still climbing at the fastest rate seen since 2006.
No one could have predicted how the last year unfolded for the housing market. Looking ahead, there are still many unanswered questions. Mortgage rates are ticking upward as the economy begins to reopen and financial stimulus has been passed.
Last week’s employment report showed that jobless claims were the lowest they have been in four months. A stronger labor market could mean increased demand for housing, though this could be counterbalanced by rising mortgage rates and other factors.
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