The coronavirus pandemic has been molding US housing market predictions and forecasts for 2020 and even 2021. Initially, experts believed that the US would witness a V-shaped housing market recovery. However, the latest US housing market forecast from economists at Realtor.com paints a different picture: a W-shaped rebound.
Realtor.com’s US Housing Market Forecast: COVID-19 Update for May 2020
We have already witnessed the first drop in the W-shaped trend for the real estate market. Here, we will take a brief look at some of Realtor.com’s US housing market predictions for 2020 and the W-shaped recovery.
Home Sales Will Rebound in the Summer and Fall Real Estate Market 2020
The first rebound that the US housing market will experience is likely to come in the third quarter of 2020. Experts predict that buyers will pour back into the real estate market in the months of July, August, and September. This will come at a time when the fear of COVID-19 begins to subside. As per initial housing market predictions, the hot spring real estate market 2020 will be delayed until the late summer and fall.
Secondary Markets Will See Demand
Home prices have not seen any kind of massive drop as of yet as some predicted (keep reading for price predictions). As such, buyers are still hunting for affordable real estate. And now due to possible future quarantines, buyers are also interested in buying homes with a lot more space. This will likely lead to a surge in demand for homes for sale in secondary real estate markets. This demand for small-town real estate is forecast to be higher than normal during 2020.
Millennials Will Drive Sales, While Boomers Will Stay Put
Millennials have been driving the US housing market for a few years now. But even during the housing market recovery, the number of home sales attributed to Millennials may grow in 2020. Realtor.com forecasts that this group will make up 50% of home sales this year. But as Boomers are likely to stay put even longer than normal due to the coronavirus, this number may be higher.
Another Real Estate Market Downturn Likely in the Final Months of 2020
Health experts are predicting another wave of coronavirus cases in the winter of 2020. Typically, the winter real estate market is already slow. Home sales drop and sellers who need to unload their properties during this time usually do so for slightly lower prices. Due to the reemergence of COVID-19, however, this time of the year will be even slower for the real estate market. So another downturn is likely to happen in the final months of 2020.
Mortgage Rates Will Fall to New Record Lows
As demand continues to fluctuate with a full-blown housing market recovery likely to be delayed until 2021, Realtor.com forecasts that mortgage rates will continue to drop. Buyers still in the market may enjoy mortgage rates lower than 3% by the end of 2020 – a new historic low.
Home Prices Will See a Small Increase, with a Drop at the End of 2020
Because of the ups and downs that the US housing market is likely to face in 2020, home prices are forecast to flatten, rather than experience a drop. Real estate prices are set to increase by at least 1.1% for 2020. Of course, with the slowdown at the end of the year, there will be small drops in prices then.
Home Sales Will Decline 15% Year-Over-Year
Although the summer and fall will bring a short-lived housing market recovery, it will not be enough for a full rebound in home sales. Sales will see a 15% YoY drop.
Housing Inventory Will Remain Low
With sellers pulling listings and housing starts taking a hit due to the coronavirus, Realtor.com forecasts that housing inventory will remain low. Looking at April 2020, which saw a 45% YoY decline in new homes for sale, inventory shortages will continue to be a major issue for buyers.
US Housing Market 2021 Will See a Recovery
Following the real estate downturn at the end of the year, most experts predict a housing market recovery to take place during 2021. Although it may come slowly, things are set to pick up and experts are optimistic.
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