At the beginning of the year, industry forecasts called for
home price appreciation to slow to about half of the double-digit increase we
saw last year. The thinking was that inventory would increase from record-low
levels and put an end to the bidding wars that have driven home prices up over
the past twelve months. However, that increase in inventory has yet to
materialize. The National Association of Realtors (NAR) reports that there are
currently 410,000 fewer single-family homes available for sale than there were
at this time last year.
This has forced those who made appreciation forecasts this
past January to amend those projections. The Mortgage Bankers Association,
Fannie Mae, Freddie Mac, the National Association of Realtors, and Zelman &
Associates have all adjusted their numbers upward after reviewing first quarter
housing data. Here are their original forecasts and their newly updated
Even with the increases, the updated projections still don’t
reach the above 10% appreciation levels of 2020. However, a jump in the average
projection from 5.3% to 7.7% after just one quarter is substantial. Demand will
remain strong, so future appreciation will be determined by how quickly listing
inventory makes its way to the market.
Entering 2021, there was some speculation that we might see
price appreciation slow dramatically this year. Today, experts believe that
won’t be the case. Home values will remain strong throughout the year.