The real estate market is in uncharted territory

Strong existing-home sales and record-high pending home sales in August indicate no homebuying slowdown in fall, NAR Chief Economist Lawrence Yun says in his latest monthly report.

The striking market turnaround since the early days of the coronavirus pandemic has brought a resurgence in bidding wars and proved housing’s resilience in an unusual and volatile year, Yun adds.

But a mix of surging buyer demand and low inventory puts the industry in uncharted territory.

The national median home price has soared to an all-time high of $300,000, threatening to “choke off” first-time buyers from the market and depress the national homeownership rate, Yun says.

More homebuilding is necessary to relieve some of the market pressures.

New-home sales hit more than a million year to date in September, an encouraging sign.

However, lumber shortages are pushing up new-home prices an average of $14,000 since April.

44% of owners dissatisfied with home since pandemic

Forty-four percent of respondents to a Sears Home Services survey of 1,000 people said they are less satisfied with their home since the beginning of the pandemic.

“There’s a sense of feeling ‘trapped’ when it’s required to remain inside; we’re missing the venues we used to frequent and perhaps noticing flaws of the home while spending more time there,” the survey notes.

Households with children all living in smaller spaces are more likely to be linked to owners’ dissatisfaction.

Homeowners with children were 10 percentage points more likely to say they felt less satisfied with their home than those without.

Also, homeowners with only one or two bedrooms were more likely to report being unsatisfied with their homes.

The growing dissatisfaction among homeowners after being hunkered down may be a big factor behind the surging housing market.

Contract signings on homes surged to a record high in August and are now 24% higher than a year ago, the National Association of REALTORS® reported Wednesday.

Survey respondents said the four top features they most want to add to their homes are a home gym (41%), home office (37%), gaming space (32%), and kitchen space (31%).

Source: “Making a House a Home in the Time of COVID-19,” Sears Home Services (September 2020).

Home contract signings surge to record high

Pending home sales are exceeding pre-pandemic levels and defying forecasts.

August marked the fourth consecutive month of escalating sales contract activity.

NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—increased 8.8% in August to a record high of 132.8. (An index reading of 100 is equal to the level of contract activity in 2001.)

Contract signings are now 24.2% higher than a year ago.

Source: National Association of Realtors