Market Recap: Home Prices Appreciate, New Home Sales Jump, and Pending Home Sales Fall
Posted On February 26, 2021
Mortgage rates trended upward this week but remain in a historically low range. Home prices appreciated at the fastest pace since 2014. New home sales rose nationwide while pending home sales slipped slightly.
In December, home prices appreciated 1.3% month-over-month and 10.1% annually, according to the Case-Shiller home price index. The year-over-year gain marks the largest annual rise in home prices since April 2014. According to the 20-city index, the largest annual home price gains took place in Phoenix, Seattle, and San Diego – rising 14.4%, 13.6% and 13%, respectively. “The trend of accelerating prices that began in June 2020 has now reached its seventh month,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI. “These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes.”
In January, new home sales rose higher than expected – up 4.3% from December. Reaching a seasonally adjusted annual rate of 923,000 in January, new home sales surged well beyond MarketWatch’s predicted level of 850,000. Compared to January 2020, new home sales are up nearly 19% despite a slight drop in home inventory. The demand among home buyers is still high and economists “expect that the vaccine rollout will likely boost inventory,” said Chris Glynn, principal economist at Zillow.
According to the National Association of REALTORS® (NAR), pending home sales fell 2.8% in January. Compared to last year, however, pending sales are up 13% – showing that the housing market is still going strong despite the typical seasonal slowdowns. “Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” Lawrence Yun, the chief economist for the NAR. “That said, there has been an increase in permits and requests to build new homes.”
Home buyer demand is still relatively strong in comparison to previous years. With more commuters working from home, more people are searching for homes outside of metropolitan areas. Now could be a great time to stop paying rent and invest in a long-term home where you can build a future and valuable home equity. If you are curious about your home financing options or the benefits of home buying vs. renting, contact us and we would be happy to go through your different options.