One year after the pandemic shut down much of the country, life and the housing market remain unpredictable. CNBC warns housing’s fall from grace could be coming sooner than later. With increasing home prices, rising mortgage rates, and dropping housing inventory, the market could be overdue for a “correction,” says CNBC. Record low mortgage rates and social distancing guidelines kept much of the country in their homes, resulting in Americans taking a good, hard look at their physical spaces. By August, home sales were at the fastest pace since 2006. What does this mean for the near future?
Americans, unsure when they would be able to get back out in the world again, were looking for more indoor and outdoor space. They wanted dedicated rooms for working and schooling at home. Manufacturers of accessory dwelling units, which are small backyard tiny houses, saw demand triple. People wanted additional space and, yes, some solitude from all that family time.
The strong demand for housing, however, came at a time when the supply of homes for sale was already low. Much of that was due to a still-slow recovery in homebuilding from the Great Recession. When the pandemic hit, sellers pulled back, not wanting to let anyone in their homes nor to move themselves. What followed were drastic changes in every facet of the market.
The average rate on the popular 30-year fixed mortgage began 2020 right around 3.75%, according to Mortgage News Daily. It then fell at the start of the pandemic in March, shot up briefly in April, when the first economic stimulus was announced, and then dropped precipitously throughout the rest of the year, setting more than a dozen record lows.