As previously mentioned, 2021 marked one of the best years for real estate in recent memory. After the coronavirus pandemic stifled home sales throughout the country, the real estate market rebounded at a quicker pace than anticipated.
However, the real estate market still deals with longstanding housing inventory challenges. In addition, rising home prices and mortgage rates produce a barrier to entry for prospective first-time home buyers.
Median Prices Soar for Existing and New Homes
Existing home sales unexpectedly declined in December 2021. However, that decline was short-lived as sales of existing homes soared 7% in January 2022. As a result, existing home sales well exceeded their consensus forecast. Additionally, the median existing-home price jumped 15% higher compared to January 2021. Currently, the median existing-home price sits at $350,300.
On the other hand, sales of new homes declined 5% in January 2021. In doing so, they fell to an annualized rate of 806,000. Having said that, this statistic came close to the consensus forecast. In January 2021, new home sales hit their peak. At a rate of 993,000 units, new home sales also achieved their highest level since 2006. Despite the slight decline in sales, the median new home price skyrocketed 13% higher than last year. In conclusion, the median new-home price is at $423,300.
Housing Inventory Falls to Record-Low Level
While the real estate sales data came out favorably overall, housing inventory presents an ongoing barrier to better sales numbers. in the present-day, the backlog of new homes approved for construction but not yet started soared to a record high of 26%. Analysts attribute the construction delays to higher prices and shortages for key inputs. Key inputs include materials, such as lumber and appliances restrained the pace of building.
Having said that, the housing inventory situation continues to worsen. In January 2022, housing inventory levels plummeted 17% from a year ago. concurrently, housing inventory hovers at just a 1.6-month supply nationally. Notably, housing inventory falls well below the 6-month supply. Not only is this well below the margin for a healthy balance between buyers and sellers, it is also represents a record-low level.
Building Permits Surprisingly Beat Their Consensus Forecast
With the shortage of available homes in many areas, investors closely watch the monthly reports on housing starts. The most recent data displayed mixed results. In January 2022, housing starts unexpectedly declined 4% from December 2021.
Meanwhile, building permits surprisingly beat their consensus forecast. Thus, building permits climbed to their highest number since 2006. Although building permits are indicative of future real estate activity, higher prices and shortages for land, materials, and skilled labor bar faster home construction.
Focusing on the Real Estate Market in March 2022
While the February 2022 reporting presented somewhat of a mixed bag for the real estate market, other issues remain on the table. Recently, Russia’s invasion of Ukraine flooded global headlines and leaves much uncertainty for economic conditions.
More so, the Federal Reserve still intends to stall the rapid rise of inflation. In March, investors anticipate an increase to the federal funds rate.
To learn how February 2022’s real estate news affects Chicagoland closings, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.