Americans went on a shopping spree in 2020, buying up more houses than they have in 14 years.
Triggering the surge was the COVID-19 outbreak, which drove cramped apartment dwellers to hunt for space outside cities, the Wall Street Journal reported. Making the decision to move easier were record low interest rates.
Existing home sales hit 5.64 million in 2020, the most since the 6.48 million sold in 2006, according to data from the National Association of Realtors. The median price climbed to $296,500, a 9% increase.
Brittany McCreary and her husband bought their first home last month, leaving the Chicago area for York, Pa.
“It’s totally because of the pandemic,” McCreary told the Journal. “We’re glad we’re not renting anymore. We always wanted to buy.”
Strong house-buying demand is expected to continue this year, economists say, spurring more economic activity like home construction and sales of furniture and home goods. But a shortage of houses for sale is pushing home prices higher, making it costlier for renters trying to enter homeownership.
“Homeowners are smiling, because they are seeing price increases,” said Lawrence Yun, NAR’s chief economist. “The frustration is coming from the first-time buyers.”
Falling interest rates kicked off last year, spurring millennials to take the leap from renters to home owners. But lockdowns slashed sales until summer, when demand kicked in again.
“The real important driver has been the record low level of mortgage rates … which really enhanced affordability for home buyers,” Frank Nothaft, chief economist at housing-data provider CoreLogic Inc., told the Journal.
And home sales should stay high as borrowing rates stay low, according to Doug Duncan, the chief economist for Fannie Mae, the government mortgage lender.
“There’s still demand that’s not being met,” Duncan said.