Home Sales of $1T in South in 2021?

Key Highlights

• Experts expect 2021 to be record year for home sales
• South expected to lead the way for home sale

Experts Expecting Record Year for Home Sales

Redfin is projecting home sales to hit $2.53T in 2021. This dollar amount would represent an increase of +17% y/y, the largest annual increase since 2013, as well as a record high in home sales.

Daryl Fairweather, Redfin’s chief economist, said, “We expect 2021 to be an even more active year for the housing market than 2020 because homebuyers have a better sense of what the future looks like.   Employers are providing clarity on permanent remote work policies, the economy is recovery and mortgage rates remain low.  All of these factors mean that we’ll likely see even more buyers enter the market this year and in 2022.”

The South to Lead the Way in Home Sales

Why is the South projected to be the leader in home sales during 2021?  More and more people have and will move to southern cities for three reasons…tax friendliness, larger lot sizes and comparatively lower housing costs.

According to Fairweather, “A lot of wealth from the coasts is shifting South.  Affluent homebuyers from New York and San Francisco have moved to places like Florida and Texas during the pandemic, which has fueled home sales and driven up process in those areas.

Here are Redfin’s home sales projections by region

• The South – $1.09T
• The West – $696.3B
• The Midwest – $422.6B
• The Northeast – $322.8B

Mortgage Bankers Association, Freddie Mac and Fannie Mae Even More Bullish about Home Sales in 2021

The Mortgage Bankers Association (MBA) is predicting mortgage origination levels to hit $3.28T while Freddie Mac is predicting origination levels to hit $3.5T in 2021.

Sam Khater, Freddie’s chief economist said, “As the economy continues to improve, we expect conditions to remain generally favorable for the housing and mortgage markets. Higher mortgage rates have the potential, however, to dampen the robust demand we’ve been experiencing.  Other important obstacles to consider include high home prices and low housing supply…”

Fannie Mae’s chief economist Doug Duncan said, “Consumers appear to be increasingly looking forward (to) post-pandemic life.  While inflationary pressure is growing, our latest forecast update suggests that in the near term interest rates will remain steady at borrower-friendly levels.”

MBA Mentions Potentially Increased Interest Rates

MBA Chief economist Mike Fratantoni expects economic growth to jump to 6.5% in 2021 and with that jump, he is expecting the 30-year fixed mortgage rate to rise to 3.7% by the end of 2021.

According to Fratantoni, “The economy will continue to recover, with rapid job growth, particularly in the hardest-hit service sectors of the economy. The job growth is certainly positive, but this environment sets the stage for higher mortgage rates and faster inflation.  However, if housing inventory levels improve and help to keep affordability in check, home sales should remain strong into 2022.”

Thanks to Redfin, Freddie Mac, Fannie Mae, Mortgage Bankers Association and HousingWire.

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