The housing market made an incredible recovery in 2020 and is now positioned for an even stronger year in 2021. Record-low mortgage interest ratesare a driving factor in this continued momentum, with average rates hovering at historic all-time lows.
According to the latestRealtors Confidence Index Surveyfrom theNational Association of Realtors(NAR),buyer demand across the country is incredibly strong. Thats not the case, however, on the supply side. Seller traffic is simply not keeping up. Heres a breakdown by state:
As the maps show, buyer traffic is high, but seller traffic is low. With so few homes for sale right now, record-low inventory is creating a mismatch between supply and demand.
NAR also justreportedthat the actual number of homes currently for sale stands at1.28 million, down 22% from one year ago (1.64 million). Additionally, inventory is at an all-time low with 2.3 months supply available at the current sales pace. In a normal market, that number would be 6.0 months of inventory significantly higher than it is today.
What does this mean for buyers and sellers?
Buyersneed toremain patientin the search process. At the same time, they must be ready toact immediately once they find the right home since bidding wars are more common when so few houses are available for sale.
Sellersmay not want to wait until spring to put their houses on the market, though. Withsuch high buyer demand and such a low supply, now is the perfect time to sell a house on optimal terms.
Bottom Line
The real estate market is entering the year like a lion. Theres no indication it will lose that roar, assuming inventory continues to come to market.
