In early spring, when coronavirus shutdowns began, few would’ve predicted that the summer housing market would be as hot as it turned out to be. Buyer demand rebounded quickly and home sales numbers surpassed year-before levels sooner than anyone could’ve expected. However, though the housing market’s rebound is undoubtedly good news, there is another side to the story. Put simply, home buyers returned to the market before sellers and the resulting imbalance drove already low inventory levels even lower.
And naturally, fewer homes for sale combined with an increasing number of interested buyers put upward pressure on home prices. In fact, according to one recent analysis, the shortage of homes for sale caused a 0.7 percent price increase month-over-month in August. That might not seem like much, but it’s actually the largest monthly gain in seven years. It was also pretty evenly spread, with 48 of the 50 largest markets showing accelerating home prices during the month.
Fortunately for home buyers, mortgage rates remain near record lows, which helps to counteract the spike in prices. Also, home builders have begun to ramp up construction, which should help bring some relief to markets suffering from a lack of homes for sale. (source)