The US housing market has shown unexpected trends during the Covid-19 pandemic. Since the start of the pandemic period, the real estate market experienced a hike in prices from the last year. And the prices for houses in the US reached 13.2% more in March 2021 than at the same time last year.
At present, the house prices in the US are seeing a hike but there is a scarcity of houses for people to buy. Due to the high house prices and scarce availability, the US housing market is seeing a decline in terms of growth. It is applicable for both existing homes and new homes.
Hike in Home Prices with a Record Low Supply
According to the S&P CoreLogic Case-Shiller National Home Price Index, the US homes priced 13.2% dearer in March 2021 than in March 2020. The rising prices for land, labor, and building materials are leading to a spike in house prices in the US.
Due to the scarce supply of homes & high prices, homebuilders are finding it difficult to sell homes effectively. Amid the Covid-19 pandemic, the city dwellers are moving to the suburbs and families are buying home offices. It is leading to a spike in the prices of homes in the US.
Homeowners are not ready to sell their homes due to which there is a low supply of homes for sale. As a result, buyers are involving themselves in forced bidding wars. As per the available data, the end of April saw only 1.16 million houses for sale in the US. This number is down by 20.5% from the last year.
Real Estate Market is Expected to Witness a Slow Growth
Analysts believe that the real estate market will remain on the low side despite the market stabilizing in the future. Ian Shepherdson of Pantheon Macroeconomics has said the demand for homes outside cities has declined due to Covid-19.
This, in collaboration with, the higher mortgage rates and strict lending standards have put brakes on the US housing market. As per the data provided by the Commerce Department, new home sales declined 5.9% in April from March.
Existing home sales saw a decline of 2.7% in April, amid high prices and scarce supply, said the NAR. The Conference Board revealed only 4.3% of surveyed consumers in May are likely to buy a home in the next six months.
