Experts predict that 2021 home sales will come in 7% above 2020 levels.

Economists at Realtor.com weighed in on how they think the housing market will shape in 2021 after the wild and crazy ride we’ve been on in 2020. On home sales economists predict activity to slow from those frenzied levels which represented underlying housing demand as well as make-up buying for a spring season many buyers missed out on plus a sense of urgency brought on by record-low interest rates. Still, they are predicting that home sales in 2021 will come in a whopping 7% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year. “As make-up buying from the disruption of spring 2020 fades, home purchases will be propelled by underlying demand in 2021,” the economists wrote. “This demand will come from a healthy share of Millennial and Gen-Z first-time buyers as well as trade-up buyers from the Millennial and older generations.” And what about home prices? Realtor.com is predicting that home price gains will end 5.7% above 2020 levels, decelerating steadily through the spring and summer, and then gradually reaccelerating toward the end of the year. Here’s the pattern they predict: first a slowdown and the prices will settle into a sideways pattern and eventually begin to turn higher. The slowdown is thanks to more sellers expected to enter the market. The uptick is down to the expectation that those Gen-Zers looking to buy their first home and Millennials who are both first-time and trade-up buyers will keep upward pressure on home prices. And expect improvements to inventory. “We expect inventories to improve and, by the end of 2021, we may see inventories finally register an increase for the first-time since 2019,” the economists wrote. “The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp-up in new construction restore some bargaining power for buyers, especially in the second half of the year.

Source: Rise and Shred