2021 Housing Market Shaping Up to be Even Hotter than 2020

Rhea-AI Summary

The latest report from Redfin, dated February 3, 2021, predicts an ongoing seller's market due to a shortage of homes. Home-sale prices surged by 18% and pending sales increased by 28% year-over-year. Inventory declined by 36%, leading to homes selling in an average of just 34 days, the fastest on record. Low mortgage rates are fueling demand, while the expectation of vaccinations may prompt more sellers to enter the market. This dynamic is causing increased competition and price growth in the housing market.

Positive

• Home-sale prices up 18% year-over-year.
• Pending sales increased by 28% from the previous year.
• Average home selling in just 34 days, 20 days faster than last year.
• Demand is 60% higher than last year, indicating strong interest.

Negative

• Inventory of homes for sale down 36% year-over-year.
• New listings decreased by 13%, compounding supply issues.

SEATTLE, Feb. 3, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — The extreme pandemic-driven seller's market is intensifying and will likely last through the first half of the year, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

In the week ending January 24, home-sale prices soared 18% and pending sales grew 28% from the same period last year. Fifty-five percent of homes that went under contract that week found a buyer in 14 days or less—the largest share to sell that quickly in at least nine years (Redfin data on this measure goes back through 2012).

"The main thing going on is scarcity of homes for sale. There's nothing there, so people want it even more," said Seattle Redfin real estate agent Scott Petrich. "Potential homebuyers who don't have a good amount of savings are having a very hard time getting a house right now because the lack of supply is driving up prices, while low mortgage rates increase demand."

Both the number of homes for sale—down 36% from a year ago during the week ending January 24—and the rate that new homes are being listed for sale—down 13%—are falling from last year's already-low levels. The average home spent just 34 days on the market before selling—20 days less than the same time a year ago and also a record low for this time of year as far back as our data for this measure goes.

"There will continue to be a lack of new listings in early 2021," said Redfin chief economist Daryl Fairweather. "But rock-bottom mortgage rates will have buyers eager to purchase the few listings that do hit the market. So I expect bidding wars, fast sales and double-digit price growth to continue. We are at a point in the pandemic where would-be sellers are expecting to be vaccinated in the next 6 months, so they may be waiting for that before selling. Once many more people are vaccinated for the coronavirus and more homeowners start to feel comfortable listing their homes for sale, the current deadlock of housing supply should start to loosen. Mortgage rates could inch up at the same time, which could bring a slight chill to the scorching-hot seller's market."

Homebuying demand, which typically slows through the winter, is 60% above where it was last year. This is according to the Redfin Homebuyer Demand Index, which measures requests to Redfin agents for homebuying services such as home tours and making offers to purchase a home.

"I don't see the market slowing down at all in the next few months," said Phoenix Redfin real estate agent Van Welborn. "People are confident in the market and people are buying homes. And it seems like nothing is holding them back: There was absolutely no slowdown for the holidays, the election didn't affect anything, and the attack on the Capitol didn't register on the housing market at all."

While the hot market is largely only benefitting the few people who are selling their homes this winter, there are many people who simply couldn't have afforded to buy a home within a short commute to work who are taking advantage of the flexibility of remote work and moving to where they can afford home prices and more space.

"It used to be that homebuyers who were priced out of the closer-in suburbs would look farther out for a home they could afford and compete for," said Petrich. "Thanks to remote work, there has been a huge shift in homebuying demand to the farther-out, less expensive suburbs. It was very competitive before, but it has become much more intense now that people need more space."

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/2021-housing-market-forecast/

About Redfin

Redfin (www.redfin.com) is a technology-powered residential real estate company, redefining real estate in the consumer's favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we are the #1 nationwide brokerage website, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Since our launch in 2006, we have saved our customers over $800 million and we've helped them buy or sell more than 235,000 homes worth more than $115 billion.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

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SOURCE Redfin

FAQ

What does Redfin's February 2021 report say about the housing market?

Redfin's report indicates a continuing seller's market driven by a scarcity of homes, with prices rising and demand significantly above last year's levels.

How much did home-sale prices increase according to Redfin's report?

Home-sale prices increased by 18% year-over-year as of January 24, 2021.

What trends did Redfin observe in pending home sales?

Pending home sales grew by 28% from the same week last year, suggesting robust buyer activity.

What is the expected impact of mortgage rates on the housing market according to Redfin?

Low mortgage rates are expected to drive further buyer demand, even amidst a shortage of new listings.

How quickly are homes selling in the current market?

Homes are selling at an average of just 34 days on the market, marking a record low.