Here are the latest housing market predictions for 2021 to 2025. The covid 19 pandemic shuffled the world order and the US economy suffered its biggest blow since the Great Depression in the second quarter. It has been roughly one year when it put the housing market on hold for several months last spring. Even with rising mortgage rates and higher prices, economists say the housing market should remain strong due to very tight inventories and increasing demand as more millennials are projected to buy houses this year.
Now millennials make up the largest share of homebuyers in the US, according to a 2020 survey from the NAR. According to a new study by Realtor.com, buying is more cost-efficient than renting in a growing number of the largest cities in the country. This is encouraging news for the millions of millennials who are approaching peak homebuying age. Back in March of last year, the real estate market looked to be headed into a steep decline due to widespread stay-home orders.
Since then, homebuyers, supported by low-interest rates, have kept the US housing market afloat. The pandemic has certainly affected every sector but residential real estate market has been very resilient and it continues to be a pillar of support for the economy. The housing market bounced back in 2020 much faster than other sectors of the economy and has sustained that growth and pace into 2021.
2020 was a record-breaking year for the US housing market. The typical U.S. home was worth $266,104 in December, up 8.4% (or $20,587) from a year ago. A total of 5.64 million homes were sold in 2020, up 5.6% from 2019 and the most since before the Great Recession, according to Lawrence Yun, NAR’s chief economist. Sales also rose 0.7% from November and 22.2% year over year. Existing home sales reached the highest level in 13 years.
In 2021, so far, the housing market continues to be competitive for buyers resulting in higher home prices and quick-selling homes. In March 2021, the median home listing price reached an all-time high of $370,000, up 15.6% compared to last year. The large metros saw an average price gain of 12.1% compared to last year.
Homes moved off the market six days less than the same time last year and the housing supply (for sale listings) have declined by 52.0% over last year, a higher rate of decline compared to the 48.6% drop in February. With the increasing prices, the monthly mortgage payments have also increased by almost $100. The monthly payment for an 80% loan for the typical listing hit $1,260 in March 2021, matching the previous peaks in both fall 2018 and spring 2019, according to Realtor.com.
With the continued supply-demand imbalance, this upward pull on prices is expected to remain consistent in 2021. This pace of appreciation can decline only if either supply ramps up or demand softens. There are reasons to believe a change in the trend’s intensity is on the horizon as more inventory is expected to become available later this spring. Homes will sit on the market longer, markets will accumulate more active listings.
More listings in spring-summer buying season and higher mortgage rates, both of which can slow down the pace of home price appreciation. In the second half of this year we will see higher mortgage rates and, as they continue ticking up, which may begin to create a ceiling on the median home price growth, as monthly payments on new mortgages become less and less affordable.
Home building will continue and new homes will pile up a bit which will slow down the rate of price appreciation. Existing home sales dropped to a six-month low in February 2021 (lowest level since September 2020) to an annual rate of 6.22 million, a drop of 6.6% from January, according to the National Association of Realtors. On a year-over-year basis, sales were 9.1% higher than a year ago. Even with the decrease, sales were 9.1% higher than a year ago and prices were 15.8% higher.
It is believed that shortages of available homes may be affecting sales. NAR's report shows that despite the drop in home sales housing market continues strong even as mortgage rates tick up to the highest levels this year amid rising long-term bond yields. The 30-year fixed-rate average rose to 3.09% last week, according to Freddie Mac.
The housing market has been struggling to keep up with the demand for the past decade. The pandemic has led to a surge in demand. The median sales price of a home has risen 16% from last year and they have increased even more in some regions of the country like the Northeast and West, which are both up 21% from last year. The inventory of homes for sale declined by aboiut 30% annually in February 2021, a record drop.
It will remain tight in 2021 because there are first-time buyers (Millennials) coming into the market. About 4.8 million millennials are turning 30 this year, and will continue to do so for the next three years, a significant positive force for the economy and housing. The main challenge for markets is meeting this upsurge in demand with a declining supply.
New home sales also decreased by 18.2% in February to a seasonally adjusted 775,000 while prices rose, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. The figure was still 8.2% higher than the estimate for February 2020. January's sales number was revised upward to 948,000 from the earlier estimate of 923,000.
New contruction of single-family homes is expected to grow this year. The median price ($349,400) is 5.3% over median price posted a year earlier. Eventhough new home prices are rising due to increase in lumber prices, the lack of existing homes for sale means new construction is the only option for some prospective home buyers.
The housing market has seen buyers hyperactive in 2021, driving up home prices by double-digits and causing homes to sell quickly in competitive market conditions. Currently, there is an extremely tight supply of homes on the market, the lowest on record since the turn of the century. Further home price gains are expected until either supply ramps up or demand eases.
There are reasons to believe that the housing supply will ramp up in the coming months. Realtors believe that the first vaccine roll-out is expected to ease seller apprehensions, which should improve the supply trends throughout the year. Additionally, an improving economy is maintaining upward pressure on mortgage rates over the last couple of months.
In February 2021, the unemployment rate was little changed at 6.2 percent, much lower than their April 2020 highs, according to the U.S. Bureau of Labor Statistics. Working from home has driven up demand for more space but the survey also indicates the number of people working from home has been dwindling each month.
In February, 22.7 percent of employed persons teleworked because of the coronavirus pandemic, down from 23.2 percent in January. These factors will have an impact on housing sales and rents in the coming months. As of now, the rent growth remains lower than pre-COVID rates, but the overall downward trend is leveling off.
Interest rates ticked up again this week, continuing their steady trend upward that has played out for most of 2021. The FHFA announced that it will limit its purchases of loans secured by second homes or investment properties to just 7% of its portfolio. Therefore, mortgaging second homes or investment properties likely to get more expensive in 2021.
Generally, mortgage rates are higher by about 0.5% to 0.75% for second homes and investment properties than for the home you live in. If mortgage rates increase in the coming months, it will affect the affordability and will challenge buyer demand in the months ahead.
Realtor.com's market data for the week ending March 27, 2021, shows that the median home price of all the listings increased by 17.2% over last year, notching the 33rd consecutive week of double-digit price growth. In February of last year, before the outbreak of the pandemic, home prices were rising at the rate of 3.9% year-over-year. Clearly, today's rate appreciation is almost three and half times more than that.
Here's how the national housing market has been trending for the past couple of weeks and its comparison with the time when the shutdowns were imposed in the country.
- Homes are selling quickly as buyers try to capitalize on low mortgage rates before they rise back to last year's levels.
- Time on market was 9 days faster than last year.
- The total number available for sale at any point in time continues to drop lower and lower, dropping 53 percent since last week.
- New listings were up 6.3 percent compared to this time last year.
- Relative to 2017 to 2019's data, March 2021 was still roughly 117,000 new listings lower.
- More new listings are expected in March and April of 2021 as they traditionally do heading into spring.
- After recent winters, the housing demand rebound is much faster than the supply recovery.
- To deal with limited existing homes available for sale, homebuyers are turning to new construction homes, helping to fuel continued increases in new home sales so far this year.
- New construction, which has risen at a year-over-year pace of 20% or more for the last few months, will provide some additional relief with regards to short supply.
- With buyers active in the market because of the uptick in mortgage rates, homes are moving quickly.
Housing Price Forecast 2021: The Pace of Appreciation Continues in Double-Digits
The market trends in the first month of 2021 showed that home buyers will face a competitive spring season as inventory remains low. The exploding demand has led buyers to desperately bid up the prices of available properties, sending home prices soaring. House prices in all the major local real estate markets continue to rise. The housing market is becoming harder for home buyers. The demand is really high, and the supply and inventory are deficient.
The housing demand will continue to surge due to several factors. For e.g; the millennials have aged into their prime homebuying years, and they are now the fastest-growing segment of home buyers. In 2018, millennial homeownership was at a record low but the situation has changed markedly.
They are no longer holding back when it comes to homeownership. According to the National Association of REALTORS’ Home Buyers and Sellers Generational Trends Report, millennials make up the largest share of the homebuying population at 38 percent. The older millennials (aged 30 to 39) making up 25 percent of that and younger millennials (age 22 to 29 years old) making up 13 percent.
These younger consumers are mostly buying first homes (86 percent of younger millennials and 52 percent older ones). According to Bloomberg, not only are millennials buying homes but their “starter homes” are multimillion-dollar homes rather than the traditional humble first property.
Millennials are expected to continue to drive the market in 2021 and the participation of first-time homebuyers and older millennials is widely forecast to be elevated. Hence, the “2021 housing market” is looking to be super-competitive for home buyers. With homebuyers active and supply still lacking, the current pace of home price growth seems unlikely to change in the near term.
Therefore, homebuyers have to face more competition and act more quickly than usual to snag their dream home. Housing prices had already started rising before the pandemic arrived but the pandemic created a rapid acceleration in double-digits.
In a new Urban Institute report, researchers found that if the country continues down the same road, over the next two decades the US homeownership rate is set to decline to 62.1 percent. They project the overall homeownership rate will fall from 65 percent in 2020 to 62 percent by 2040.
Household growth averaged 12.4 million per decade from 1990-2010, 7.3 million from 2010-2020. They estimate an average growth of 8.5 million from 2020-2030 and 7.6 million from 2030-2040. This decline is the result of slowing US population growth and lower headship rates for most age groups.
Another key finding is that the renter growth will be more than twice the pace of homeowner growth from 2020 to 2040. Between 2020 and 2040, there will be 9.3 million net new renter households, a 21 percent increase.
The main reason behind such an extreme pace of home price appreciation is the basic economic seesaw of supply and demand. The country needs far more units to meet demand but there has been a large and persistent shortfall in recent years. On top of that, the pandemic has really knocked down homebuilders' ability to fill the housing supply as they are running out of land.
The housing market has already been running too short of previously owned homes. Buyers are scrambling to take advantage of plummeting mortgage rates that make the cost of buying a home much cheaper. The number of homes for sale has plummeted and remained down around 30 percent of what it has been in recent years — leaving the market with nearly twice the demand and two-thirds of the supply.
Both the inventory of homes and mortgage rates are now at their historic lows. The months’ supply of existing homes for sale has fallen to 1.9 months, the lowest level since the series began in 1999. With inventories this tight, it is unlikely that existing home sales can continue to rise at last year's pace, which means there could be a little slowdown in existing sales throughout 2021. ESR Group expects home sales to rise 3.8 percent in 2021.
The rise in remote work has also sparked a new suburban boom and the scarcity of developed land means that builders could be unable to meet the rising demand and home prices would continue to rise in 2021. One thing that has been talked about a lot is that suburban housing markets are booming because of outbound migration from cities. The pandemic has caused some homebuyers to search for homes in a different area than originally planned.
Various surveys indicate that interest in rural areas and suburbs is up and interest in urban areas is down. However, Zillow published an exhaustive study examining every conceivable housing-market data point related to cities and suburbia to see if there are major divergences that suggest an urban-to-suburban migration trend.
According to that study, suburban housing markets have not strengthened at a disproportionately rapid pace compared to urban markets. Both region types appear to be hot sellers’ markets right now – while many suburban areas have seen a strong improvement in housing activity in recent months, so, too, have many urban areas.
Nevertheless, the pandemic has increased the desire for houses with a bit more space and a garden. Couple that with record-low interest rates, and prices are rising dramatically all over the country from urban-to-suburban markets.
For now, there are no indications that price growth is going to slow. Zillow Economic Research predicts that annual home value growth will rise as high as 13.5% by mid-2021 and for home values to end 2021 up 10.5% from their current levels. Their forecast also calls for sales volume to remain elevated in the coming year, finishing 2021 at 6.9 million sales, the most since 2005.
In previous forecasts, the company predicted a 4.8 percent increase in home values between August 2020 and August 2021. The current extreme demand that is reflected in sharply rising prices, can be attributed to the pent-up demand for home purchases from the March-July period when a great part of the country was in total lockdown.
The housing sales and prices have stayed strong through the fall and winter months amid increasingly short inventory and high demand. Existing home sales also show the tightest housing market on record. The demand has not gotten significantly shorter since last May/June, and buyers and sellers are continuing to connect at a record pace. December existing-home sales rose 0.7% from November.
This trend shows that the housing market is as strong as it was during the housing bubble. It is nowhere too close to a level where you can imagine the balance real estate market conditions. Speedy home sales continue in all regions of the country and the median sales price continues to have double-digit growth. The flow of buyers and sellers has remained abnormally high in the entire fall season.
That's how hot the real estate market has been throughout the pandemic. Although millions were laid off or furloughed it didn’t prevent house hunters from buying homes across the nation. As a result, the housing market saw the highest pace of sales growth since the height of the unprecedented housing boom in 2005.
That expansion was driven by negligent lending in the subprime mortgage market and the current housing boom is driven by the intense demand and record-low mortgage rates. Both of these factors were driven by the coronavirus pandemic. The housing market has seen record-breaking growth since June after briefly put on hold during the outbreak of the pandemic this spring.
As prices keep climbing month-over-month, it just shows the resilience of the US housing market in the face of an ongoing economic recession. Although sellers are listing more & more homes we need more new home supply to add to inventory and slow these sharp price increases.
Are Housing Prices Affordable in 2021? Housing Affordability is driven largely by the gap between household income and home value. It is influenced by the balance between housing supply and demand, the labor market, and mortgage rates by way of Federal monetary policy. Housing is affordable when the housing of an acceptable minimum standard can be obtained and retained leaving sufficient income to meet essential non-housing expenditure.
The most commonly used indicator in the US and many other countries is the ratio of house prices to incomes or earnings. A higher ratio indicates relatively more affordability. A ratio of 100 indicates that median-family income is just sufficient to purchase the median-priced home. Ratios above 100 indicate that the typical household has more income than necessary to purchase the typical house.
Therefore, low-income households spending a high proportion of their income on housing may and vice versa.
In 2020, mortgage rates were reduced due to the pandemic which helped offset the sting of higher prices. In 2021, mortgage rates are expected to stop dropping. Rather, the National Association of Realtors expects rates to average 3.1% and the Mortgage Bankers Association says mortgage rates will average 3.3% in 2021. These rate estimates are both up from the 3.0% mortgage rate average in 2020 but lower than 2019 average rates.
As mortgage rates are expected to rise in 2021, affordability is likely to become a bigger challenge this year. The combination of intense demand and the low mortgage rates has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers.
While we still face economic and health challenges ahead, it is no doubt that the nation will continue to recover from this pandemic and an improving economy will continue to prop up the housing market competition. Industry experts believe the housing market will remain strong and is set to break more records in 2021.
Various national surveys (which you can read below) show that consumers are eager to spend more on housing in 2021, as the economy continues to slowly recover from the pandemic. Strong growth is expected in 2021 for housing sales, rents, and home prices. A report from the Federal Reserve Bank of New York found that the median household expects to increase their spending by 3.7% in the next twelve months, the most optimistic outlook since 2016.
This time the housing market is largely being driven by two factors: a shortage of available housing inventory and extremely low-interest rates. Double-digit annual growth in both list and sale prices show an extreme lack of inventory and incredible demand — A sign of a seller's real estate market.
The housing market is still hot, but we may be starting to see rising home prices hurting affordability unless the mortgage rates continue to decline in 2021. Additionally, even if mortgage rates help blunt the effects of higher home prices on monthly payments, they don’t offset the need for larger down payments and other closing costs as home prices rise.
Mortgage applications decreased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 12, 2021. The Refinance Index decreased 4 percent from the previous week and was 39 percent lower than the same week one year ago.
The 30-year fixed-rate increased to its highest level since June 2020, and all other surveyed rates were either flat or increased. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.28 percent from 3.26 percent, with points decreasing to 0.41 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
“Mortgage application activity was mixed last week, as the run-up in rates continues to reduce incentives for potential refinance borrowers. The 30-year fixed-rate increased to its highest level since June 2020, and all other surveyed rates were either flat or increased,” said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. “After reaching a recent high in the last week of January, the refinance index has since fallen 26 percent to its lowest level since September 2020. Rates have jumped 36 basis points since the end of January, and last week refinance activity fell across all loan types.”
The combination of rising mortgage rates and increasing home prices will accelerate the decline in affordability and further squeeze potential home buyers during the spring home sales season. Mortgage rates have increased in four of the first six weeks of 2021. Expect mortgage rates to continue to hover around record lows. The Federal Reserve has reassured that it will keep interest rates and its bond-buying program unchanged — downplaying any urgency to bring borrowing costs back up from their lowest levels in history at near zero.
According to Bankrate’s latest survey of the nation’s largest mortgage lenders, as of March 4, 2021, the average 30-year fixed-mortgage rate is 3.18%, 0.95 percentage points below the 2019 annual average rate. It is an increase of 4 basis points over the last seven days. This time a month ago, the average rate on a 30-year fixed mortgage was lower, at 2.84 percent.
At the current average rate, you’ll pay principal and interest of $431.37 for every $100,000 you borrow. That’s an additional $2.18 per $100,000 compared to last week. A year ago, the 30-year fixed-rate, was 3.70 percent, so you would have paid $460 each month for the same amount. The average 15-year fixed-mortgage rate is 2.50 percent, up 2 basis points over the last week. Monthly payments on a 15-year fixed mortgage at that rate will cost around $667 per $100,000 borrowed.
According to Realtor.com, the median listing prices grew at 13.7 percent over last year to reach $353,000 in February 2021, notching 26 consecutive weeks of double-digit price growth. This growth rate was a little lower than January's growth rate of 15.4%. However, at $353,000, February’s median listing price surpassed last year’s peak unseasonably early.
With demand still high and supply still limited, this path seems unlikely to change in the coming months. 2021 real estate market is predicted to remain sizzling hot affecting housing affordability.
So, for now, we have a median price of $353,000 and an average 30-year fixed mortgage rate of 3.18%. Assuming a buyer provided a 20% down payment, the principal and interest payments on the mortgage would have been $1,218 a month.
Contrast that with Feb 2020, when the median price was $310,000 and the average interest rate on a 30-year mortgage was around 3.45%, according to Freddie Mac. A buyer faced a payment of $1,106, or $112 less a month than what he is paying now. Assume that builders and sellers had met buyer demand, keeping prices flat over the year.
Lower mortgage rates would have resulted in a monthly payment of $1,069, or a savings of $37 a month as compared to a year before. As you can see, low mortgage rates help but don't eliminate the risk of affordability crunch that the housing market could still face if home prices continue to rise at a rapid pace.
Buying a home in a seller’s market can feel like you’re losing money. You may just wait a few months or even a year so that prices will flatten (or come down). The problem is that prices could keep rising to the point where you’re priced out of the market. There’s no guarantee either way.
Therefore, we feel this is the right time to buy your dream property or you can opt to refinance at today’s rates to at least cut your monthly mortgage payments. The present scenario makes it appealing to buyers who have been spending all this money on rent.
New Single-Family Housing Construction Trends 2021
In 2021, the Mortgage Bankers Association (MBA) forecasts single-family housing starts to be around 1.134 million. And that could just be the beginning, as projections going forward are even rosier: 1.165 million single-family homes in 2022 and 1.210 million in 2023. New home builders will ramp up production to help relieve the shortage of inventory of homes for sale throughout the United States. The added inventory would no doubt aid buyers in their search to secure their dream home, while also helping to ease price increases throughout the country.
According to Urban Land Institute, real estate market conditions and values in the U.S. are expected to rebound in 2021 and trend even higher in 2022, with single-family homes outperforming other sectors such as commercial, retail, hotel, and rental. Home prices will grow an average of 4.1% over the next three years, above the long-term average of 3.9%, according to the report, based on a survey of 43 economists at 37 leading real estate organizations.
The NAHB gets input from builders on how confident they are in the housing market based on buyer behavior, sales, and incorporates any forecasts as well. The building permits have rebounded from pandemic lows and builders are racing to fill the gap between supply and demand.
Despite high buyer traffic and strong demand, builder sentiment fell in March as rising lumber and other material prices pushed builder confidence lower. Supply shortages and high demand have caused lumber prices to jump more than 200% since last April. NAHB/Wells Fargo US Housing Market Index is at a current level of 82.00, down from 84.00 last month and up from 72.00 one year ago. This is a change of -2.38% from last month and 13.89% from one year ago. Builder confidence had peaked at a level of 90 last November, now down by 8 points.
Only one of the three major HMI indices fell in March. The HMI index gauging current sales conditions fell three points to 87 while the component measuring sales expectations in the next six months increased three points to 83. The gauge charting traffic of prospective buyers held firm at 72. Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 80, the Midwest fell one point to 80, the South dropped two points to 82 and the West posted a three-point loss to 90.
New Residential Home Sales & Prices 2021
Sales of existing home sales are at an all-time high but new home sales have also risen during the pandemic. Those sales are allowing builders to raise prices. Buyer traffic is converting into sales at a record rate. Residential construction ended in 2020 on a strong note. Housing starts rose 5.8% to 1.67 million annualized units in December. Total starts were 2.8% higher than a year ago.
After a slight rebound in December and January, the slowing of the pace of new single-family home sales continued in February. New home sales dropped to a seasonally adjusted 775,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 18.2 percent (±13.9 percent) below the revised January rate of 948,000 but is 8.2 percent (±21.7 percent) above the February 2020 estimate of 716,000. Higher interest rates, supply shortages and rising lumber prices, put a damper on new home sales in February.
However, demand remains strong as prime buying season begins to heat up. As a result, the median sales reached $349,400, up from $346,400 in January 2021. The average sales price was $416,000, up from $408,400 a month ago. Inventories, meanwhile, remain tight with 312,000 new homes for sale, an increase from January's 307,000. That represents about a 4.8 month supply.
Courtesy of Census.gov
Housing Market & Mortgage Delinquencies 2021
Record-low mortgage rates and shortage of inventory are keeping the US housing market strong concerning buyer demand. Prices have been surging month-over-month breaking new records. The government’s moratoria have effectively stopped foreclosure activity on everything but vacant and abandoned properties. 2020 ended the year with a near-record number of seriously delinquent loans, but historically low levels of foreclosure activity.
There is a backlog of foreclosures building up due to this moratorium and no one knows how big that backlog is until after the government programs expire. The foreclosure backlog comprises three types of loans — loans that were in foreclosure before the government's moratoria; loans that would have defaulted under normal circumstances; and loans that would default due to job losses induced by the pandemic.
To help borrowers at risk of losing their home due to the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until February 28, 2021.
It will give relief to more than 28 million homeowners with an Enterprise-backed mortgage. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on January 31, 2021.
Per the last three extensions, the FHFA said it will continue to monitor the effect of coronavirus on the mortgage industry and update its policies as needed. Currently, FHFA projects additional expenses of $1.4 to $2 billion will be borne by the Enterprises due to the existing COVID-19 foreclosure moratorium and its extension.
US Housing Foreclosure Statistics 2021
ATTOM Data Solutions, licensor of the nation's most comprehensive foreclosure data released its February 2021 U.S. Foreclosure Market Report. There were a total of 11,281 U.S. properties with foreclosure filings — default notices, scheduled auctions, or bank repossessions — up 16 percent from a month ago and 77 percent from a year ago.
“Extensions to the Federal Government’s foreclosure moratorium and CARES Act mortgage forbearance program continue to keep foreclosure activity historically low,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company.
The main reasons for this massive drop in foreclosure activity are the moratorium and “CARES Act” mortgage forbearance program, which have effectively prevented millions of seriously delinquent loans from entering the foreclosure process.
- Nationwide 1 in every 12,182 housing units had a foreclosure filing in February 2021.
- Lenders started the foreclosure process on 5,999 U.S. properties in February 2021, up 15 percent from last month and down 78 percent from a year ago.
- Out of those only 1,545, U.S. properties were repossessed through completed foreclosures (REOs) in February 2021, up 8 percent from last month and down 85 percent from last year.
- It is the 13th consecutive annual decline in completed foreclosures.
The following states saw a decline in “completed foreclosures” from last month:
- Indiana: -75% in REOs
- Colorado: -75% in REOs
- South Dakota: -67% in REOs
- Utah: -67% in REOs
- Alabama: -56% in REOs
States with the highest foreclosure rates in February 2021:
- Utah (one in every 3,883 housing units with a foreclosure filing)
- Delaware (one in every 5,219 housing units)
- Florida (one in every 6,232 housing units)
- Illinois (one in every 6,336 housing units)
- Louisiana (one in every 7,923 housing units)
Among the 220 metropolitan statistical areas those having the worst foreclosure rates in February 2021:
- Cleveland, OH (one in every 3,943 housing units)
- Jacksonville, FL (one in every 5,707 housing units)
- Riverside, CA (one in every 6,478 housing units)
- Birmingham, AL (one in every 6,532 housing units)
- St. Louis, MO (one in every 6,651 housing units)
- Provo, UT (one in every 787 housing units)
- Shreveport, LA (one in every 1,951 housing units)
- Lake Havasu, AZ (one in every 2,247 housing units)
- Cleveland, OH (one in every 3,943 housing units)
- Florence, SC (one in every 3,980 housing units)
Mortgage delinquencies improved in January 2021 but still, 2.1 million homeowners remain delinquent, according to the latest data released by Black Knight.
- The national mortgage delinquency rate fell to 5.9% in January, dropping below 6% for the first time since March 2020.
- January’s improvement among overall delinquencies as well as seriously past-due mortgages was nearly identical to the average improvement seen during the recovery to date.
- While delinquencies continue to improve slowly and steadily, some 2.1 million homeowners remain 90 or more days past due but not yet in foreclosure – still five times pre-pandemic levels
- Recent forbearance and foreclosure moratorium extensions have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period
- At the current rate of improvement, 1.8 million mortgages will still be seriously delinquent at the end of June when foreclosure moratoriums on government-backed loans are currently slated to lift
- With widespread moratoriums still in place, both foreclosure starts and sales (completions) remained near record lows in January
Prepayment activity fell by 17% month-over-month in January but remains 86% above last year’s levels
Rental Market Trends 2021
The rental market appears poised to turn the corner and demand for rental units is expected to surge in 2021. While rising rents is a good sign for rental property owners, it will certainly put millions of renters hit hard by pandemic-related income loss in an even more difficult position, and further government intervention will likely be needed to avoid a painful wave of evictions.
In general, there are some significant early signs of trend reversals from what the rental market saw throughout the majority of 2020. These shifts, however, don’t come as a total surprise, as the rental market tends to pick up in the New Year after the holiday season.
Below you'll find various rent reports that highlight year-over-year rent trends and price fluctuations that renters may be experiencing in various parts of the United States.
The multifamily industry continues to face steep challenges brought in by the pandemic. The federal government has included $25 billion as rental assistance in the recently passed COVID relief package. The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 88.6 percent of apartment households made a full or partial rent payment by January 20 in its survey of 11.6 million units of professionally managed apartment units across the country.
This is a 2.5 percentage point, or 294,224 household decrease from the share who paid rent through January 20, 2020, and compares to 89.8 percent that had paid by December 20, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type, and average rental price.
February 2021 Data by Realtor.com shows that rents at the national level, calculated by averaging the top 50 largest metros, are still growing below pre-COVID rates. The median rent in February was $1,452, up 0.6% year-over-year while in March 2020, rents were growing by 3.2% year-over-year. Rent growth has stabilized, hovering just under 1% for the past three months. This may signal an eventual return to pre-COVID growth rates in the coming months after a consistent downward trend over the past year.
- February 2021 data: In the 50 largest metros, the median rent was $1,452, up 0.6% year-over-year.
- Rent growth remains lower than pre-COVID rates, but the overall downward trend is leveling off.
- Rents have hit their bottom in many markets.
- Renters searching in urban centers can save thousands of dollars per month before rents begin rising again.
- Rents are increasing the most in New Orleans, LA; Sacramento, CA; Memphis, TN; and Riverside, CA metro areas — all saw double-digit growth year-over-year in February.
- Rent declines in expensive, high-tech hubs remain the norm.
- San Jose, CA and San Francisco, CA are seeing the largest declines in rents, along with Seattle, Boston, Los Angeles, and Washington, D.C.
- Returning to these Tech Hubs can save renters thousands per year in rent.
Among the 50 Largest Metropolitan Areas, these are the top 10 metros that saw the largest rent increases in February 2021. New Orleans, LA was the fastest-growing metro area, with the median rent reaching $1,324 in February, up 18.7% year-over-year.
Housing Market Forecast 2021: Will The Boom Continue?
With 10 years having now passed since the Great Recession, the U.S. has been on the longest period of continued economic expansion on record. The housing market has been along for much of the ride and continues to benefit greatly from the overall health of the economy. However, hot economies eventually cool and with that, hot housing markets move more towards balance.
The housing market 2020 was running at a record pace in the early stages of the coronavirus outbreak in February 2020, with sellers continuing to gain leverage, and buyers benefit from lower mortgage rates. We saw some of the best home sales and housing starts to pace in more than a decade until February 2020.
While home prices never declined, they were flat on a year over year basis in April 2020, and in May 2020 homes took more than two weeks longer to sell compared to the previous year. As buyer interest rebounded, however, home prices began to climb and sales began to quicken such that by summer homes were selling as quickly as they had the year before, and home prices were growing by high single-digits on their way to double-digit pace.
Before the COVID-19 pandemic, Realtor.com's national housing forecast for 2020 was that home price growth will flatten, with an expected increase of 0.8 percent. Inventory was predicted to remain constrained, especially at the entry-level price segment. Mortgage rates were predicted to likely bump up to 3.