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The housing market is in hot momentum. The median price of America’s single-family home is sitting at $354,000 this week. This is 9% higher than at the same time last year, and fractionally more than the week prior. As the things are spread out, it is likely that we will be 8-9% gainers on the yearly chart till October for sure. Holidays should restore some normalcy because sustained 8-9%, honestly, is too intense to be managed.
The inventory has been terribly short and buyers, pressed back for long by the pandemic, are on a rebound. The demand-supply rift has brought price concerns. To put it in numbers, 70,000 new listings can’t support buyer-frenzy and it is natural to expect a fall in inventory (down to 584,000).
To judge the organic level of demand in the housing market, we can trust those active listings which have seen a price drop lately. The process is simple. Homes are ideally listed by the end of Q2. If they are still unsold by October, they undergo price cuts to ensure a deal before holidays arrive. Come January and the market resets itself. 2020 has been different. Together, the pandemic lag and extremely low mortgage rates have ensured that there is a smaller price drop. By now, unsold homes that would be expecting a 35% drop are in the 25% zone.
Another way to arrive at this is to look at the bidding wars and how they are 5 times higher than the same time last year; with the fight enclosing as many as 55% of the U.S. properties.