The fall and winter months are typically slower times of the year for the national housing market, with the selling season kicking off every spring.
And while signs of market cooldown have been apparent through the fall, some economists say the overall market hasn’t slowed as much as was initially expected. Add in supply-chain issues, continued high demand and the possibility of mortgage-rate hikes, buyers and sellers could be more active this winter than they traditionally are.
The S&P CoreLogic Case-Shiller Indices reported a 19.5% annual home-price gain in September 2021, down from 19.8% in the previous month. It was the first month since May 2020 that annual gains in home prices slowed, albeit modestly and still at a sizable year-over-year increase.
In a November Redfin report, it was found that U.S. home prices hit a new all-time high, $359,975, in the four-week period that ended Nov. 21. That’s up 14% year over year and home prices rose in November nearly four times faster than they did at the same time last year.
Homebuyers who dropped out of the housing market in the spring have returned under the assumption there will be less competition. They may be surprised to discover that bidding wars are still common because so many house hunters are looking to take advantage of low mortgage rates before they rise.
The end of 2020 and early months of 2021 were abnormally strong, and real estate economists aren’t expecting a repeat of that surge in the early part of 2022. But the more material slowdowns typically seen in the cooler months of a pre-pandemic world may not return, at least not right away.
If you look at what happened in 2021, the season started a lot earlier and, quite frankly, it never really ended. We might see that again this year. There may be a brief blip over the holidays but it’ll be very brief.
People are planning much better today than they used to, in part because of supply-chain issues and a persistent labor shortage. Sellers, for example, are having a hard time hiring tradespeople to fix up their homes before listing them, or finding items like faucets or fixtures at their local home-improvement stores.
The housing market is holding onto a substantial amount of momentum. Buyers may also be energized by the recent, although minor, uptick in mortgage rates and predictions of that continuing into 2022.
Some households that closed on homes in the fall may’ve been in the market for a longer period of time, having lost out on bids during the ultra-competitive spring season. Over the past six months, buyers have gotten more realistic about what they are able to purchase.
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