5 Housing Market Trends that Shaped 2020, According to Realtors

The National Association of Realtors’ Confidence Index Survey asks Realtors about the top housing market trends they are experiencing on the local level each month. For the housing market last year, Realtors identified five top trends, which can help to create a broader picture of the market. First, Realtors say the top trend from 2020 was the intense competition for fewer homes. Existing home sales reached their highest level since 2006, mortgage rates fell drastically, but intense demand drove median sales prices up 13%. In addition, the average offer per sold property went from two to four and properties sold at an average of 26 days compared to 24 from 2019.

2. More first-time buyers
With low mortgage rates, the first-time buyer share rose to 33% from  32% in 2019. In level terms, there were 1.86 million first time buyers, a 9% increase from 1.7 million in 2019 (compared to 5.6% overall increase in existing home sales).

First-time buyers could have made a bigger entry with mortgage rates falling by nearly a percentage point in 2020, but rising prices made a home purchase less affordable.3 The lack of supply for lower-priced homes on the market and the higher down payment and closing costs that go with rising home prices likely kept potential buyers on the sidelines.

According to NAR’s Profile of Home Buyers and Sellers, the starter price of first-time buyers is about 85% of the market price, or around $250,000 (85% of the median sales price of $296,500 in 2020 ). However, supply is tight at that price range, equivalent to 1.8 months of monthly housing demand, well below the 5 or 6 months that keep prices from rising faster than income growth. The average weekly wage was about 6% higher in December 2020 from one year ago, a pace that is just about half the home price appreciation in December 2020.

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