There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.
“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.”
Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.
1. Mortgage Rates
If we look at the
30-year mortgage rate chronicled by
Freddie Mac, we can see the average rates by decade:
Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.
Currently, mortgage rates are anything but usual, typical, or routine.
2. Home Price Appreciation
According to
Black Knight, a housing data and analytics company, the
average annual appreciation on residential real estate prices since 1995 has been 4.14%.
According to the
latest forecast from the
National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since
Black Knight began collecting this data.
Currently, home price appreciation is anything but usual, typical, or routine.
3. Months’ Supply of Inventory (Homes for Sale)
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”
As of the latest
Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.
Currently, the supply of homes for sale is anything but usual, typical, or routine.
4. Days It Takes To Sell a Home
The
days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.
Currently, the days-on-market metric is anything but usual, typical, or routine.
5. Number of Offers per Listing
Currently, the number of offers per listing is anything but usual, typical, or routine.
When…
1. Mortgage rates are near historic lows
2. Price appreciation is at historic highs
3. Housing inventory is less than half of the normal amount
4. The time it takes to sell a home is cut in half, and
5. There are twice as many offers on each house
…it’s hard to say we’re in a normal market.
