Shoppers are modifying their strategies, beginning their home searches earlier and earlier. It’s kind of come out of the blue. It used to be only the hard-core bargain hunters shopped in winter.
From 2015 through 2018, the peak month for average views per listing on Realtor.com was April. January lagged behind by a full 16%.
But in 2019, January was the busiest month on the site in 20 of the largest 100 metropolitan markets. Real estate agents who are used to starting their spring prep in February may get left out in the cold. A lot of shoppers spent the holiday season getting pre-approval letters.
The increased competition is reigniting rising home prices, too. After slowing in the first half of 2019, gains began to pick up again in September and continued in October, according to the latest S&P CoreLogic Case-Shiller Home Price Indices. It’s bound to get even hotter.
Price increases are broadest on the lower end of the market, while softening slightly on the high end. In November 2019, the supply of entry-level homes priced below $200,000 was a stunning 16.5% lower than in 2018.
This year’s spring market will likely see even fewer homes for sale. Current homeowners are reluctant to give up what they have, given how pricey the market is now, so it is up to the nation’s homebuilders to ease the supply crisis. They are increasing production slowly, but have not fully focused on the lower end.
The new decade has kicked off with a fairly stable interest-rate environment. Mortgage rates started off 2020 roughly 80 basis points lower than at the start of 2019. That’s welcome news after the turbulence of the last year, which caused a slowdown in the housing market and other sensitive sectors.
Mortgage rates roughly follow the direction of the 10-year Treasury note, which has already been boosted a few times in the New Year: Investors often turn to safe harbors when global politics get shaky.
If mortgage rates remain favorable, buyers are even more likely to try and get a head start on the competition.