Housing Starts Hit Highest Pace Since 2006
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Single-family housing starts ended 2020 on a high note, rising 12% in December to a 1.338 million unit pace – the highest pace since 2006, according to the Census Bureau.
That’s up 27.8% from one year ago, a remarkable figure given the economic effects of the COVID-19 pandemic, per industry officials.
“2020 will go down, quite unexpectedly, as one of the best years for home builders in recent memory, and proof that great challenges — and not just those posed by COVID — can be overcome with hard work and creativity,” said Matthew Speakman, Zillow economist. “Demand for homes remains sky high, despite the still-raging pandemic, as people look to take advantage of historically low mortgage rates and find their next home.“ Read more from Housing Wire.
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New Home Purchase Applications Remained Strong to Year's End |
The Mortgage Bankers Association (MBA) estimates that applications for the purchase of newly built homes rose only 0.2 percent from November to December, however, those applications were up 42.2 percent compared to December 2019. The information comes from MBA's monthly Builder Application Survey (BAS) and was not adjusted for typical seasonal patterns. Read more from Mortgage News Daily.
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Existing Home Sales in 2020 Hit Highest Point Since 2006, But Listings are at a Record Low |
Pandemic-driven demand sent total 2020 home sales to the highest level since 2006.
Still, even the most avid buyers are bumping up against barriers in today’s housing market. Record low supply and record high prices are limiting the exceptionally high demand.
Closed sales of existing homes in December increased just 0.7% from November to a seasonally adjusted annualized rate of 6.76 million units, according to the National Association of Realtors. Sales were 22% stronger than in December 2019.
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The Housing Market Caps Off a Historic Year
The U.S. housing market faces a fascinating decade ahead.
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But this acceleration of new construction is not likely to be nearly enough to meet demand in a market that remains severely supply-constrained while interest rates and relocation booms continue to fan the flames of price appreciation.
As data from the Federal Reserve show, we saw more than a decade of depressed construction activity following the housing bubble and this supply dynamic is what a fast growing market is running into today. As of November, there were just 2.3 months of supply on the market with the average home taking just 21 days to sell. Data on December’s inventory squeeze are due out next week. Read more from Yahoo Finance.
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Are Some Buyers Going ‘Too Far’ to Win a Bidding War? |
Facing an upsurge in housing demand across the country, many home buyers are finding themselves in bidding wars for the limited inventory on the market. To win, buyers are trying to find ways to entice sellers beyond price—and at times are taking it too far, real estate professionals say.
Mary Lou Wertz of Maison Real Estate in Charleston, S.C., talked to The Wall Street Journal about one couple relocating from New York who fell in love with a $1.2 million, four-bedroom home online. The seller had already accepted another offer, however. The New York couple offered to pay $10,000 more than the other buyers as well as offer their competitors $25,000 to walk away from the home. They also told the seller that they would make a $30,000 donation toward a hospital for cancer research since the seller had recently lost his wife to cancer. Read more from NAR's Realtor Magazine.
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Mortgage Market Update
Mortgage Rates Move Slightly
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Mortgage rates have hovered near historic lows for almost a year, fueling purchase and refinance activity amid a global health crisis. We’re now seeing rates fluctuate a bit as political and economic factors drive Treasury yields higher. However, we forecast rates to remain relatively low this year as the Federal Reserve keeps interest rates anchored near zero for a longer period of time, if needed until the economy rebounds. |
We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us. |
phone: 610.834.8700
Information and analysis is obtained through third parties and is deemed accurate but not guaranteed. Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Dept. of Banking and Securities, NJ Dept. of Banking & Insurance, the state of DE, the Florida Office of Financial Regulation, MD Mortgage Lender #23004 and VA State Corporation Commission #MC - 6797. NMLS #128570.
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