The usual renewal that spring brings will have an added layer for the home industry this year: Along with the return of blooms and migratory birds, the housing market is poised to have a stellar spring season. Despite January not meeting December’s performance, the industry is no longer held back by the rising interest rates and recession fears of last year. Existing home sales are up 9.6% from a year ago to 5.46 million, and prices increased year-over-year in every region. It is as if the market went through the obligatory post-breakup makeover and is now ready to jump back in the game.
The slight pullback in existing home sales in January from December should not diminish a key message as the 2020s begin in earnest: The housing market at the beginning of 2020 is in a much stronger position than it was at the beginning of 2019. A year ago, the housing market was hamstrung by a combination of a slumping stock market, mounting recession fears, surging mortgage interest rates and a prolonged government shutdown. The result was a slump in sales of existing homes. Fast-forward a year, and those conditions have all but evaporated. Today’s deepening shortage of inventory looks to be the biggest obstacle to a further liftoff in sales – it’s difficult to sell meaningfully more homes when there are simply so many fewer homes available to buy.
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