Since Summer 2021, the housing market has been a frenzy. Record-low mortgage rates created a spike in demand while a national lumber shortage resulted in problems with supply. Suddenly it was a sellers dream, having more demand for their home in shorter time frames, and usually with several offers over the asking price. For buyers, the market and competition has been brutal, whether it’s trying to get a new build home or buying a pre-build home. Where do experts see things going for the rest of 2021? Check it out below!
Seller’s Market Will Continue to Reign
Despite that home construction has begun to pick back up the last month or so, the supply of homes for the amount of buyers is still lower than normal. Therefore, experts predict that high-demand and smaller supply of homes will likely continue for the rest of the year. According to the National Association of Realtors, the median price of an existing home in June was up over 23% year over year. While it’s the perfect time to put your house on the market, from a buyer’s standpoint it’s not the best.
The national lumber shortage is still ongoing, albeit it is starting to turn as more mills have opened back up across the U.S.. However, this process is not a quick one, so the turnaround expectation for the lumber supply to replenish is minimum a few more months. Another factor that is still negatively affecting home building is the national shortage of computer chips that control home appliances. So new, top-of-the-line appliances may be near-ready to go and installed for new homes & properties, but without the chip it leaves them right at the finish line of production, which in turn affects new build and renovation completions.
While the pandemic brought about record-low mortgage interest rates, they won’t last forever. The 30-year fixed mortgage rates are likely to begin rising during the second half of 2021. The National Association of Realtors anticipates that rates will increase by 30 basis points, and the Mortgage Bankers Association predicts a 50-basis point increase. Benchmark mortgage rates in the second quarter of 2021 were around 3.08%, so the average prediction will have the rates increased to 3.38% in the third and fourth quarter.
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