The US real estate market has been hot. The combination of low borrowing rates, strong demand for more living and working space from home as the pandemic spreads and tight supply has pushed up prices.
In July, the average price of a home was $ 360,000, an increase of almost 20% in one year. Prices have been climbing every month for nine and a half years.
This trend is expected to continue when August existing home sales are announced Wednesday in the coming week. While it is important to focus on prices and sales, which are indicators of demand, don’t overlook the supply. More homes could come on the market, which will help cool the market.
Homeowners struggling to pay their monthly mortgage were able to put those payments on hold for months. As of May 2020, more than 4 million homeowners were in forbearance, allowing them to delay payments. By mid-August this summer, that number had fallen to 1.6 million people according to the Mortgage Bankers Association. That’s about one in 31 borrowers who postpone their mortgage payments, and most of them have been delaying their payments for more than six months.
Meanwhile, the federal moratorium on foreclosures expired in July. Home foreclosure is a process, so ending the suspension is unlikely to trigger a case crush. Instead, expiration can cause distressed homeowners to sell their homes before they risk foreclosure.
Zillow has estimated that 850,000 homeowners will see their mortgages come out of forbearance between August and October, pushing tens of thousands more homes onto the market. The very first evidence of this new offering will begin to appear in the August data released this week.
These can be motivated sellers who hope to profit from the rising market and liquidate their debt.
A house is for sale.
Financial reporter Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami, where he is vice president of information. He is the former co-presenter and editor of the “Nightly Business Report” on public television. Follow him on Twitter @HudsonsView.