U.S. Housing Market Immune to COVID-19
U.S. house prices will continue to race ahead over the next two years, according to a poll who said any COVID-19 resurgence was unlikely to knock housing market activity off its current upward course.
Last year, most of the world’s largest economies were brought to their knees by the pandemic but record low interest rates and pent-up demand for homes pushed U.S. house prices to levels not seen in more than half a decade.
Despite the U.S. economy on average contracting last year at its sharpest pace since the Second World War, it had little bearing on housing market activity, an immunity the sector was expected to carry this year.
Although strong demand has led to higher home prices, a shortage of supply was squeezed further with inventory levels falling to a third of what is viewed as healthy. After existing home sales touched nearly 7.0 million units last October – the highest since November 2005 – home builders ramped up construction activity to try and match demand.
Both housing starts and building permits are at levels not seen since the previous housing boom well over a decade ago. Existing home sales were forecast to drop but stay elevated and average around 6.0 million units this year. Strong demand at a time of a supply squeeze has pushed prices up, and when asked to rate U.S. housing affordability on a scale of 1 to 10 – where one was cheap and 10 expensive – analysts rated it 7.