No one could have predicted it.
Not the economists, not the real estate agents, and especially not the nation’s homebuilders.
But a pandemic caused an emotional run on housing unlike any other.
Now, one year after the Covid-19 crisis shut down and warped so much of American life, things are still unpredictable, but the outlook isn’t bright for housing.
In fact, it looks like the perfect storm for a correction.
Home prices are overheated, mortgage rates are rising, the supply of homes for sale is anemic and consumer confidence in the housing market is falling.
Pandemic-related mortgage bailouts are set to expire this summer.
A year ago, home sales ground to a halt.
No one wanted to buy or sell or even enter a home, given all the physical and economic uncertainty that Covid-19 brought.
But just a few months later, housing hit the gas pedal, and prices followed.
The frenzy was hugely emotional, as the nation saw most aspects of daily life suddenly confined to its properties.
Space became a major asset.
It was also fueled by very attractive mortgage rates, which set more than a dozen record lows.
After plunging nearly 18% from March to April and another 10% from April to May, sales of existing homes shot back up nearly 21% in June, according to the National Association of Realtors.
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” Lawrence Yun, NAR’s chief economist, said at the time. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
Yun was right – but his prediction still turned out to be too conservative.
Homes sales were not only sustainable, they were robust.
By August sales were running at the fastest pace since 2006.