Since the fall of 2020, the housing market has been hot for sellers. Starting September 2020, home prices increased one percent month over month. In July 2021, this increased to two percent. Once we reached the fall of 2021, there seemed to be a brief slowdown until November, when prices once again jumped from 1.2 percent appreciation to 1.4 percent in December.
The reason for the still-increasing prices, according to experts, has to do with the time of year and the number of houses on the market. According to USA Today, in December 2021, there were 19.5 percent fewer homes to choose from than a year ago. And even then, we were still seeing a record low of available homes.
It’s also possible that the rising number of Omicron cases caused homebuyers and sellers to delay any sales towards the end of 2021. But now that Covid cases don’t seem to be as prevalent as before, buyers once again feel confident in purchasing their new homes.
So, what does this mean for interested home buyers and sellers in 2022?
“It is a hint to us that perhaps the spring homebuying season is coming early,” said Alexandra Lee, an economist at Zillow. “We ‘would usually expect the ‘winter months to still be relatively slow. But with this reacceleration and understanding just how hot the market has remained over the last year, the housing market is starting to heat up earlier than usual.”
Average Prices Increase by 16 Percent as Homes Fly off Market
The past year has demonstrated just how dramatic of a change the housing market has seen. Across the country, the median existing-home price for all housing types increased by 16 percent from December 2020 ($309,200) to December 2021 ($358,000). And compared to December 2019, last year saw 40.5 percent fewer available homes for sale.
Despite the widespread increase in home prices, sellers are having no issues finding a suitable buyer. In fact, in December many homes only remained on the market for a mere 19 days with 79 percent being sold within a month.
Meanwhile, mortgage rates, too, have hit their highest levels since March 2020. Mortgage loan company Freddie Mac reported that the 30-year-fixed-rate reached 3.56 percent this week. Lawrence Yun, the chief economist for the National Association of Realtors, theorized that the rising mortgage rates could be the reason why homebuyers are rushing to sign the papers even though home prices are increasing as well.
“One can say that there are some people who want to jump in before the interest rates rise even more strongly,” Yun said. “We will get more inventory throughout the year but some of the buyers will be priced out because of higher interest rates.”