Nationwide Home Prices Continue to Increase

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Nationwide Home Prices Continue to Increase

Posted by HomeHunt on November 4, 2021
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October 2021 Housing Market Update

The pandemic continues to influence the housing market nationally as home prices consistently increase each month. A recent study from CoreLogic shows home prices have increased year-over-year by 18% from September 2020 to September 2021. Additionally, month-over-month, home prices have increased by 1.1% from August 2021 to September 2021.

The forecast shows continued monthly price surges and predicts another 0.1% increase from September 2021 to October 2021. However, from September 2021 to September 2022, home prices are expected to only rise by 1.9%, providing a much-needed equalization in the housing market.

Supply and Demand

COVID-19 has generated a large demand in home buying as millenials move toward big cities and older generations move away to evade virus risks. Home buyers previously forced to remain over the height of the pandemic now eagerly seek a new or first-time home. This jump in home buying has resulted in nationally elevated home prices.  Frank Martrell, President and CEO of CoreLogic, says:

“The pandemic led prospective buyers to seek detached homes in communities with lower population density, such as suburbs and exurbs. As we head into 2022, we expect some moderation in the current pattern of flight away from urban cores as the pandemic wanes.”

Millennials Flock to Big Cities

Though the market shows an influx of home buyers moving away from cities, the most significant housing demand comes from millennials moving in and around hub cities, such as Seattle, San Jose, Phoenix, and Austin, for tech jobs. Booming cities around the country display drastic home price increases, making it difficult for first-time home buyers to purchase. Phoenix leads with home price increases by 31% year-over-year; San Diego follows with a 22.6% increase.

Top cities forecasted to experience decreasing home prices over the next 12 months include:

  • Springfield, MA
  • Merced, CA
  • Reading, PA
  • Worcester MA-CT
  • Norwich-New London, CT
Sellers in these areas may find it hard to sell at their asking price. However, buyers looking to move to the Northeast U.S. should pay attention to these cities’ price cuts as they hunt for homes.

COVID-19 Leads to Low Mortgage Rates

Another factor in the housing market is the decreased mortgage rates put in place over the pandemic to ease borrowers’ financial stress and entice home buying. Joel Kan, VP of The Mortgage Bankers Association, says:

“Treasury yields fell last week, as investors continue to anxiously monitor if the rise in COVID-19 cases in several states starts to dampen economic activity. Mortgage rates slightly declined as a result, with the 30-year fixed-rate decreasing for the first time in three weeks. Lower rates led to an increase in refinance applications, with government loan applications jumping 10% to the highest level since May 2021.”

Home buyers and homeowners looking to refinance their homes could acquire lower interest rates if they act now. Contact HomeHunt to get connected with a mortgage professional.

What's Next?

If you’re a home buyer, expect continued competition in the housing market. With less supply than demand, buyers will make competing offers. However, first-time home buyers may find some solace in their mortgage application efforts as interest rates fall to an all-time low. This past August, the average rate on a 30-year fixed-rate mortgage decreased from 3.06% to 3.03%.

The buyer frenzy the U.S. is currently experiencing could simply represent the purchases that would have occurred had it not been for COVID-19. Forecasts show that even though prices are still increasing, there will be continued stabilization as we enter 2022.

To learn more about how the market could affect you, contact HomeHunt today!

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