There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.
Here’s the definition of normal from the Merriam-Webster Dictionary:
“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.”Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.
1. Mortgage RatesIf we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade: Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.
Currently, mortgage rates are anything but usual, typical, or routine.
2. Home Price AppreciationAccording to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%.
According to the latest forecast from the National Association ofRealtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.
Currently, home price appreciation is anything but usual, typical, or routine.
3. Months’ Supply of Inventory (Homes for Sale)According to NAR:
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”As of the latest Existing Homes Sales Reportfrom NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.