Why there are lots of home for sales now

Interest rates on mortgages - the type of loan used to buy a home - have been at historic lows for some time. Historically low interest rates fuel demand With few new homes being built, they had to pick from the same supply as everyone else, namely existing homes. The timing coincided with the coming of age of millennials, a massive generation, who are now reaching their peak home-buying years. With retirement postponed and more adults under one roof, fewer baby boomers listed their homes for sale, which further reduced the supply. Their savings took a hit, and their adult children - facing under-employment, record student loan debt and fast-growing rents - moved back home. The Great Recession, which lasted from December 2007 to June 2009, also disrupted the retirement and downsizing plans of older generations. Building has lagged far below that pace, mainly because the home-building industry was decimated during the Great Recession and had only started showing signs of a comeback earlier this year. over the long run, they need to construct 1 million homes every year. In order for home builders to keep pace with the number of new households formed in the U.S.

A sharp drop in new home construction over the past decade.

Millions of new millennial home shoppers entering the market while older generations remain in place.

Historically low interest rates that boost buying power.

A record-long expansion of the economy and low unemployment, pre-COVID-19.

More buyers than sellers = housing shortageД®ven before the pandemic, there were not enough homes for the people who wanted to buy one.

Zillow economists expect that upward pressure to last through the coming months. The high demand for the limited inventory means that sellers are holding firm on their asking prices,: only 4.1% of active listings in the last week of June underwent a price cut. In mid-June, homes listed for sale typically went under contract after just 19 days, a new record pace in Zillow data that dates back to 2018. Sellers confidence appears to be growing, though, as buyers continue to shop and prices held steady. вЂњThose two behaviors offset each other,вЂќ Olsen said, which resulted in even fewer homes available for sale and helps explain why - even as COVID-19 was hitting the economy - bidding wars for homes were still occurring in some markets. Meanwhile, homeowners intially seemed to think they might be better off waiting to sell until they get a better handle on where things are headed. Olsen said prospective buyers, many frustrated by low inventory in previous shopping seasons, may believe this is a good time to find a deal on a home and lock in a favorable mortgage rate. And online searches for homes - which are likely to be a mix of browsers and serious buyers - rose 50% above previous levels. Pending home sales and m ortgage applications from people intending to buy initially dropped off in March, but then snapped back quickly. вЂњThere are signs buyers are showing up,вЂ™вЂ™ she said. Skylar Olsen, senior principal economist at Zillow, said buyers are showing a surprising degree of confidence in the market. After that, prices are expected to return to pre-coronavirus levels before summer 2021. Economists at Zillow have been tracking key signals, however, to predict what might happen to the supply of homes and their sale prices.Д«ased on what theyвЂ™ve seen so far, Zillow economists predict that home prices will drop from their February highs by 1% to 2%, hitting their expected low point in early Fall.

economy has never had a sudden shock like the one weвЂ™re now experiencing, so no one knows how buyers and sellers will continue to respond. So whatвЂ™s going on? Why, during a time of widespread unemployment and dramatic economic decline, is it still hard to find affordable homes for sale? Why havenвЂ™t home prices come way down? And how can hopeful buyers position themselves to act if a home they want comes on the market? COVID-19вЂ™s impact on housing inventory economy fell into a coronavirus-induced recession, prospective buyers wondered whether the housing market would soon be flooded with homes for sale.Д«ut months after the virus emerged, putting millions out of work, there are even fewer homes for sale now than there were at this time last year - 20% fewer. What you can do to prepare to buy during COVID-19.

Deciding whether to buy or continue renting.

New construction could offer potential for a вЂњdealвЂќ.

Historically low interest rates fuel demand.More buyers than sellers = housing shortage.

Why there are lots of home for sales now