Real Estate Market Sales & Price Forecast 2021

The coronavirus pandemic upended the global economy in 2020. Now a year after the first lockdowns were enforced in the United States, many economic sectors are still reeling from the pandemic’s effects. The housing market, however, rebounded remarkably quickly.

Limited travel opportunities, stay-at-home orders, and movement out of major cities drove real estate demand in much of the nation. By December, home prices were up more than 8%, and home sales were up more than 5% relative to 2019. Will this momentum carry into 2021?

In this article, we’ll run through some of Liberty Home Guard’s housing market predictions for 2021. While no one can know exactly what the future has in store, we can take stock of important economic indicators and real estate market trends to get a good idea of where the U.S. housing market is headed.

Housing Market Projections for 2021

In short, it’s looking like the U.S. will sustain the seller’s market at least through the end of the year. Home sales and prices will continue to increase, more homebuyers will enter the market, and demand for available homes will continue to outpace the supply.

Other factors to consider are mortgage rates, foreclosure rates, and easing restrictions as rates of coronavirus infection rates fall.

• Home sales. Despite lockdowns, layoffs, and other economic hurdles, home sales in 2020 reached new highs. This can be attributed to mortgage rates under 3%, a delayed buying season that fueled a sense of urgency, and movement of people from large metropolitan areas to suburbs and smaller cities.
  
  That urgency may wane a bit in 2021. Mortgage rates will likely rise, so buyers may feel less pressure to act quickly. As more Americans receive the COVID-19 vaccine and offices, restaurants, and other public centers open up, the movement out of cities will continue to slow. Even so, expect home sales to continue to increase throughout the year. Existing home sales may rise between 5% and 10%. Because inventory is limited, we’ll see more newly built homes—an increase of 20% is possible.
• Home prices. Home prices rose significantly in 2020, largely due to the same factors that drove home sales. As more Americans—including many Millennials and Gen-Zers—sought homes, sellers could ask for higher prices. The surge in buyers also led to rapid turnover, with some homes finding buyers in a matter of days.
  
  So what’s the house price trend 2021 has in store? Our real estate market price forecast suggests home prices will continue to rise over the year, though not quite as dramatically as they did in 2020. A housing price increase of 5% is conservative. An increase of 8% or more is possible if mortgage rates remain low or housing inventory stays limited.
• Inventory. Housing supply was limited throughout 2020, and there’s little to suggest that will change substantially over the course of the next year. While new home construction and rising foreclosures will add to the U.S. housing supply, inventory will still be low. By the end of 2021, it’s possible that we’ll see more homes on the market, marking the first increase in supply in more than two years.
• Mortgage rates. Mortgage rates under 3% fueled much of the buying frenzy in 2020. For new homebuyers, such low rates were irresistible, and many felt they were missing a rare opportunity if they neglected buy a new home at the time.
  
  Expect mortgage rates to creep up in 2021, but they’ll still be lower relative to past years. Rates of 3% or 3.2% are likely throughout the year. By year end, 3.5% is possible.

Home Warranties and the Housing Market

Whether you’re a buyer or seller, a home warranty gives you a leg up in the housing market. A seller’s home warranty can attract buyers and raise the value of your home. A buyer’s home warranty can help you affordably and conveniently protect your new investment in the event of an appliance or system failure.

For the realtors out there, Liberty Home Guard can also provide a real estate home warranty. They right plan can help you facilitate a sale and build your business.

Use our website for a free quote for a buyer’s, seller’s, or real estate home warranty plan. You can also reach out to our team at (866)-526-1752.