The American housing market has been red hot. The combination of low borrowing rates, strong demand for more living and work-from-home space as the pandemic wears on and tight supply have driven up prices.
In July, the average price of a home was $360,000 – up almost 20 percent in a year. Prices have been climbing each month for nine and a half years.
That trend is likely to continue when the August existing home sales are announced on Wednesday in the week ahead. While concentrating on price and sales, which are indicators of demand, is important, don’t overlook supply. More homes may be hitting the market helping cool down the market some.
Homeowners having trouble making their monthly mortgage were able to pause making those payments for months. In May 2020, more than 4 million homeowners were in forbearance – allowing them to delay payments. By mid-August of this summer, that number had dropped to 1.6 million people according to the Mortgage Bankers Association. That’s about one out of every 31 borrowers postponing their mortgage payments, and most of those have been delaying payments for more than six months.
Meantime, the federal moratorium on foreclosures expired in July. Home foreclosure is a process so ending the suspension is unlikely to trigger a crush of cases. Instead, the expiration may spark those struggling homeowners to sell their homes before they risk foreclosure.
Zillow estimated 850,000 homeowners will have their mortgages exit forbearance between August and October, pushing tens of thousands of more homes onto the market. Any early evidence of this new supply will begin showing up in the August data released this week.
These may be motivated sellers hoping to cash in on the rising market and clear up their debt.
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