The housing market is booming as buyers are eager to purchase homes despite the current economic climate. According to the National Association of Realtors (NAR), existing home sales hit a record high in May 2021, with 5.81 million homes sold, a 21.8% increase from the previous year.
This surge in demand is driven by a combination of factors, including low mortgage rates, increased confidence in the economy, and a desire to move away from urban areas. Mortgage rates have been at historic lows for months, making it easier for buyers to afford a home. Additionally, the economy has been steadily improving since the start of the pandemic, giving buyers more confidence in their financial futures. Finally, many buyers are choosing to move away from cities and into suburban or rural areas, where they can find more affordable housing and larger homes.
The increase in demand has caused a surge in home prices, with the median existing home price rising 15.8% year-over-year in May 2021. This is the largest year-over-year increase since December 2005. Additionally, the number of homes available for sale has dropped to a record low, with a 3.1 month supply of homes in May 2021. This is the lowest level since NAR began tracking this data in 1982.
Despite the high demand and rising prices, experts are not worried about a housing bubble. They point to the fact that buyers are able to comfortably afford their homes and that the demand is being driven by fundamentals, such as low mortgage rates and increased confidence in the economy.
The housing market is likely to remain strong in the coming months as buyers continue to take advantage of low mortgage rates and the desire to move away from urban areas. However, the lack of available homes could cause prices to rise even further, making it difficult for buyers to find affordable homes.