Real Estate Agents and Builders Say Real Estate Is Back
Earlier this year as the economy was being shut-down across the country with shelter-in-place orders, many experts predicted the real estate industry would come to a screeching halt. We heard it over and over that home-buyers would disappear and home values would start to decline. Well, quite the opposite it taking place.
It's true the real estate market fell significantly as the economy shut-down and people stayed home. However, it has since rebounded spectacularly and continues to move full speed ahead in almost every market and that is the case here in South Florida.
Two recent reports out from NAHB, National Association of Home Builders and NAR, National Association of Realtors show the real estate market gaining strength.
Confidence Among Home Builders
Last week, a report indicated new home purchase applications rose 39% when compared against July 2019 numbers. This is excellent news for home builders. Each month, the NAHB releases its Housing Market Index, which polls active members who give their rating on market conditions for new home sales at the current time and their opinion where it will be in six months. They also rate buyer traffic for new construction homes.
This month the report indicated builder confidence in the new construction real estate market had reached its highest reading in 35 years! Chuck Fowke, NAHB chairman said:
“The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs…Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020.”
The total number of new construction homes built will be very close to the same number of homes built last year, despite the crash on home building caused by the pandemic earlier this year.
Sales of Existing Homes Have Increased
NAR released its Existing Home Sales Report showing a 24.7% increase in month-over-month sales establishing a new record for the category. The Wall Street Journal reported that the increase shattered predictions from leading experts.
“Economists surveyed by The Wall Street Journal expected a 14.2% monthly increase in sales of previously-owned homes, which make up most of the housing market.”
We saw an 8.7% increase in Home Sales year-over-year.
Chief Economist for NAR, Lawrence Yun, explained that the existing home sales market is just as hot as new construction building. He continued,
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days. With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
It should also be noted that the Housing Market Recovery Index which comes out each month by realtor.com shared the conclusion that the real estate market is rebounding. The most current Index reading was 104.8, which means the housing market is significantly better as compared to earlier this year in January and February. To explain further, the highest point in the index was a 106.5 in March, just before the pandemic took foot.
We are seeing great numbers from both new construction building and existing homes that are better than reported a year ago. Real Estate is back and with historic low interest rates, now is an excellent time to buy if you are considering a home purchase. It's a great time for sellers as well, because inventory is low, which means there is little competition to compete with.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.