There is no doubt that the economy has taken quite a hit due to the coronavirus pandemic. The COVID crisis has left several industries, including the housing sector, experiencing a sharp drop in activity across the country. It may take a while before things normalize, and the sector stabilizes once again. A close overview of the future of the housing market points out certain crucial indicators.
Industry experts expect that the housing sector will experience some slight enthusiasm throughout the summer towards the end of the year. The biggest constraint that is expected to limit this enthusiasm is the limited number of listings available. To attract more traffic in the mortgage sector, mortgage rates are expected to make a slight decline. The Feds fully back the reduction in mortgage rates as a strategy for fueling economic growth and recovery in the duration after the pandemic. The rock-bottom mortgage rates are also designed to cushion banks even as they work with the housing sector to build momentum in the two industries.
During the pandemic, the number of home sellers has significantly diminished, even as many more become cautious of disposing of their homes at a throwaway price. The new listings rate during the pandemic’s peak remained 22% below the average level for the year. The chronic shortage of homes for sale is mainly driven by the fact that people who would have given up their homes for sale intend to occupy them for much longer during the crisis.
The restricted supply of existing homes for sale in the market pushes anticipating homeowners to construct new homes. In this regard, single-family houses have become particularly famous as they are cheaper and demand fewer resources to put up. The sale of new homes grew by 13% year-over-year during the pandemic’s peak in May, something that has not been experienced in more than a decade. This observed trend could also be one factor that could help the market stabilize the rising demand and less supply, even as the existing homes are being withdrawn from the market.