This article from Housingwire discusses how sentiment for purchasing homes is climbing, despite slowing sales nationwide. The article claims that sales are still likely to stay muted for the remainder of the year and beyond, as potential buyers are being held back by low inventory and mounting competition in the housing market. The article also highlights an increase in remote work opportunities, the pandemic’s effect on migration, and sky-high prices as driving factors in slow sales, as well as some positive market trends that could increase sales in the future.
Firstly, the article discusses the increasing sentiment for home purchases, citing digital mortgage applications and record-low borrowing costs as driving forces. Despite the positive sentiment, home sales have remained rather slow, largely due to the low availability of inventory nationwide. Housing starts increased at a healthy rate in the busiest selling months, pushing up the median price of houses by a significant amount and making it harder for buyers to compete due to inflating prices and difficulty obtaining a mortgage.
Secondly, the article explains the increasing demand for remote housing due to the ongoing pandemic and more people having the option of working from home. Remote work has led to job migrations from dense city populations to the suburbs and rural areas, driving up prices and competition even in the already-low inventory environment. As a result of the increased competition, home sales in densely populated major cities have dropped consistently, though may pick up when the mortgage rates go up in the future as more buyers are expected to gradually gain steams with better credit scores and a more favorable economic environment.
Thirdly, the article looks at areas where sales activity is increasing even though other markets are slowed down. It states that the luxury real estate market has largely seen increasing demand due to COVID-19, as the affluent class of society can still afford to buy homes. On the other hand, sales at lower price points have been slower due to the lack of housing inventory, which leads to increased competition between buyers who are looking for a deal.
Finally, the article states that in the future, housing markets might see an increase in sales due to favorable market trends, such as record-low borrowing costs and improved job market, as well as a rising household formation rate, which is an important sign that people are willing to invest in the real estate market, despite low inventory and mounting competition. However, the article notes that sales might be slow as long as the COVID-19 pandemic is still a large factor, with unpredictable effects.
In conclusion, this article looks at the increasing sentiment for purchasing homes, driving factors in slow sales, positive market trends, and areas where sales activity is growing, to explain why the home sales activity has been slow and the likelihood of an increase in sales in the future.
You can read this full article at: https://www.housingwire.com/articles/purchase-sentiment-is-climbing-but-home-sales-could-stay-muted/(subscription required)
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