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A year ago, the nation’s housing market, like the rest of the economy, went into a deep, COVID-induced freeze. By the summer, the real estate industry had adjusted to socially distanced open houses, and buyers were trying to get ahead of what would become a long year of work and school from home.
As we enter the spring, the housing market has a major problem that has persisted for a year: There is a lack of supply amid skyrocketing demand. At the end of February, existing housing inventory remained at a record low of 1.03 million units, down by 29.5% year over year — a record decline. Properties typically sold in 20 days, also a record. With so few properties on the market, bidding wars have erupted, and the median existing-home sales price rose to $313,000 in February, 15.8% higher than one year ago.
Builders can’t keep up with demand for new homes, where the same market dynamics exist, but also, the costs of materials, like lumber, crude oil (the base component of paint, drainpipes, shingles and flooring) and copper, are all shooting up. The median sales price of new houses sold in February was $349,400, up 5.3% from last year.
Millennials, who had remained on the sidelines for much of the housing-market recovery, have jumped into the fray. According to an October survey from the National Association of Realtors, nearly half of millennial home shoppers were planning to buy a home sooner than expected because of COVID-19, and that helped push up the share of first-time homebuyers to 36% last year, from 31% in the previous two years. That said, the young set has to play catch-up. Forty years ago, the median age of homebuyers was 29, while today, it has increased to 34.
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