Mark Fleming, Chief Economist at First American, said the housing market is very similar to 2019 in the spring months when the majority of transactions normally occur.
According to Fleming, the economy is growing, households are high, and real estate for sale is scarce, as it was in the year before the Covid-19 pandemic.
Looking at the spring 2019 market, it’s a better gauge than last year when the lowest mortgage rates ever were sent. Home sales surge Up to the height for the first time in 15 years. And comparisons with the 2020 spring market, which was largely blocked in the United States, also don’t work, Fleming said.
“Perhaps the more insightful point of comparison is not last spring’s home buying season, but certainly the 2019 home market, not 2020,” Fleming said. “Investigating what has changed from the pre-pandemic spring home market provides a useful perspective on the 2022 spring home buying season.”
nevertheless Current mortgage rates Other factors, such as household formation, about 1 percent higher than the April-June 2019 average, according to Freddie Mac data, are a reversion to the pre-pandemic era, Fleming said.
“Household formation, a major and long-term driver of home purchase demand, has continued to rise since March 2019, contributing to an increase in potential home sales of nearly 273,000,” Fleming said.
Also, due to soaring house prices Record low mortgage rate Over the last two years, some homeowners will sell their existing homes and buy more expensive homes.
“Significant rises in home prices usually encourage more existing homeowners to move,” Fleming said. “As homeowners acquire the property of their home, they are more likely to consider using that property to buy a larger or more attractive home.”
According to Fleming, the housing market is still constrained, with more buyers than sellers as in 2019. He said new homes still face many challenges as material and labor costs continue to rise and supply chain problems continue.
The Existing home inventory for sale According to data from the National Association of Real Estate Agents, it fell to a record low of 850,000 in January and February and rose to 950,000 in March.
Partly because the owners stayed in their homes for a long time, Fleming said. Since the beginning of the pandemic, he said, as people started working from home, the renovation and renewal of existing homes surged.
“Most of our home supply for sale comes from existing homes, and existing homeowners remain the same,” Fleming said.
He said the average length of time people lived in their homes rose from 9.75 in the spring of 2019 to 10.5 years in March, setting a new record.
“The longer people live in their homes, the fewer homes they sell and the worse the lack of housing supply. You can’t buy what isn’t for sale. Buy,” Fleming says. rice field. “Staying homeowners have reduced the potential of the home market with 288,000 potential home sales compared to March 2019.”
Mortgage rates rose sharply in the first three months of 2022, but home buying power, or the amount you can buy considering your income and current interest rates, is 5.6% higher than in March 2019. I am.Rise Household incomeSaid Fleming.
“The increase in home buying power has boosted potential home sales in the housing market in March by about 113,000 compared to 2019,” Fleming said.
Mark Vitner, senior economist at Wells Fargo Securities, said a slight decline in demand as a result of rising mortgage rates this year means a slight increase in homes for sale. Inventories are still very tight, but he said they increased by 11.8% in March.
Measured as “Number of months supplied”Inventory increased from 1.7 months in February to 2 months in March, which means the time it takes to sell all properties, according to NAR data.
“In context, an average supply of four to six months usually indicates a balanced housing market,” says Vitner. “Slight inventory improvements will be welcome news for future buyers who are increasingly discouraged by the shortage of sellers and fierce competition.”
Most home forecasters forecast a decline in home sales in 2022 compared to 2021. For example, Fannie Mae, the country’s largest mortgage brokerage firm, predicted on Tuesday that existing home sales could decline by 8.6% compared to an increase this year. 8.5% of 2021 saw the most home sales since the peak of the last real estate boom in 2006.
“Comparison with 2021 may not flatten the housing market as we enter the spring 2022 home buying season, but historical background is important,” said Fleming of First American. “So far, the 2022 housing market looks very 2019. Since the recent pandemic year is unusual, it is useful insight to compare today’s housing market with the pre-pandemic era. Offers.”