As the competitive seller’s market continues and mortgage rates begin to rise, will the number of homes available keep up or will people decide to put off selling?
Fannie Mae predicts there will be a slowdown in the monthly pace of both existing and new sales later in the year. In the 2021 GDP forecast posted by Mae, the GDP is now 6.8 percent, up from a prior 6.6 percent.
We began the year with a strong housing demand with everyone wanting to buy due to low mortgage rates but as the year goes on, the hope of the housing supply catching up, is dwindling down. The hopes of people being able to buy their dream home within their budget is also dwindling down. As soon as houses enter the market, multiple offers come in and more often than not, a bidding war will happen which might push people over the top of their budget.
Not only are people spending more than their budget, but house prices are also increasing at an alarming rate so you might be paying more for a house than it normally would go for and then adding the bidding war on top of that.
With that, potential home buyers are holding off on buying a home because of these unstable market conditions. Because people are deciding to hold off on selling, less and less houses are becoming available to buy. This is also leading buyers to become frustrated.
But, with predictions of more millennials planning on buying homes in 2021, the housing demand should stay strong. In a number of ways, buying is more cost effective than renting which is attracting new millennial home buyers in this market. Unfortunately, with the shortage of homes available, millennials are causing the U.S. to run out of homes.
Even though mortgage rates are beginning to rise, they will remain on a friendly level through the rest of 2021 allowing buyers to still be comfortable and maintain the strong housing demand.