Experts Predict Home Sales to reach more than Half a Million in 2021

Home buying is a big purchase and according to a survey from realtor.com of 1,000 prospective and recent first-time homebuyers, low mortgage rates, financial assistance from parents, and personal savings are helping them to stretch their housing budgets. 

“We are surprised at what we can afford,” says more than two-thirds of survey respondents; while 47% say their budget is larger than they thought it would be.

George Ratiu, senior economist at realtor.com said that the decline of mortgage rates in 2020 was a pleasant surprise for many buyers, wherein 2020 the drop in the 30-year mortgage rate from 3.65% in March to a record low of 2.65% in January provided unexpected leverage. 

So these lower rates allowed many buyers to stretch and buy more expensive homes and keeping their monthly budget the same.

Though many first-time buyers had to compromise on their recent purchase, meanwhile nearly half of realtor.com survey respondents say they have been outbid on homes they wanted to purchase. 

The survey showed about 21%  had to expand their housing search to a less expensive neighborhood, 20% had to increase their housing budget, and close to 18% had to let go of some items on their wish lists, like a garage, large backyard, finished basement, or pool.

Half of the surveyed first-timers said that by putting aside a portion of their paycheck each month, cutting out discretionary spending, and saving lump-sum payments like tax refunds they were able to save for a home in less than three years. 

Many first-time buyers are also getting help from their family,  52% of Americans who bought their first home in 2020 say they received down payment assistance from friends or family, mainly their parents.

Lawrence Yun, chief economist of the National Association of REALTORS said, that home sales could easily be 20% higher if more homes were for sale. 

The National Association of REALTORS reported – in January the completed transactions for single-family homes, townhomes, condos, and co-ops rose 0.6% compared to December 2020 and are up nearly 24% over a year ago.  

In January all four major regions of the U.S. recorded double-digit annual gains for home sales.

As buyers quickly snatched up every new listing coming on the market home sales continued to ascend in the first month of the year. According to NAR’s report, 71% of homes sold in January were on the market for less than a month.

While the COVID-19 pandemic had upset most of the economy, the housing industry did a fantastic job. The sales and the home prices both remain high adding equity to home sellers.

With rising home sales, additional stimulus likely to pass, and availability of several vaccines are all continuing to play a part in propping up the economy. 

When the employment increases, it could spur even more homebuying over the coming months. Yun predicts existing-home sales to reach at least 6.5 million in 2021.