The housing industry emerged as a bright light for the economy this year but Zillow projects an even fiercer year in 2021. With this year still two weeks from wrapping up entirely, Zillow also projects 5.7 million existing homes to be sold for a 5.9% annual increase. The intense year only prepared 2021 to be an even stronger year. Zillow predicts almost 6.9 million existing homes to sell next year, a whopping 21.9% one-year increase, and the largest annual increase since the early 1980s. Both purchase mortgage applications and an index of pending home sales are factors impacting the positive outlook for 2021.
The first is simple momentum — near-term, forward-looking indicators of home purchases have been exceptionally strong in recent months, and that strength is expected to continue. Purchase mortgage applications have risen consistently year-over-year since May, averaging 22% annual growth over that period. And an index of pending home sales from the National Association of Realtors – a look ahead at sales expected to officially close over the ensuing few months — has also experienced double-digit annual growth since June, and was almost 20% year-over-year in October.
Continued low mortgage interest rates and favorable demographic tailwinds are both expected to contribute to a strong year for home sales in 2021.
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