May 2021 Housing Market ReportWhile the national housing data from May suggests a slight cooling-off in the housing market, home prices continue to trend upwards. In addition, mortgage interest rates continue at historic lows, encouraging more activity.

Here are some of the top trends for May.

New Home Sales Declined

Data suggest that single-family home sales are down 5.9% from April 2021, but still 48.3% higher than a year ago. Homes sold have dropped from 917,000 in April to 863,000 in May. The dip could mean that the market is beginning to slow.

Previously Owned Homes Continued to Trend Downwards

For the third consecutive month, previously owned homes have declined. In addition, the National Association of Realtors (NAR) suggests that the sales of family homes decreased 2.7% to 5.85 million units.

Though the sale of previously owned homes slowed in May, the pace was still 33.9% higher than a year earlier.

New Construction

The new construction of single-family homes has decreased by almost 14% since April 2021. Low inventory is one of the main reasons for surging home prices, so this could be a concern. On the other hand, the market seemed to be recovering strongly from the pandemic, so interested parties will keenly watch this number.

Of course, compared to a year ago, the new construction of single-family homes is up almost 60%. As a result, total housing starts decreased 9.5% last month but were still up over previous years.

Related: Top Things to Know When Buying New-Construction Homes

Home Prices Continue Rising

Overall, national home prices have gained between 13-14%. These are incredible gains due to low inventory, low interest rates, and high demand, signaling a potential housing bubble.

The expert view is that demand is high and that the patterns seen during the previous housing bubble in 2008 are not possible due to stricter lending standards and regulations. In short, mortgages are much harder to get now. So, in theory, there should be less risk. But with prices rising, it’s a difficult market to predict.

Inventory Increase

At the end of April, inventory rose 3.9%, or a total of 316,000 units on the market, from March 2021. However, this rate is down 1.6% from last year. The increase in inventory for April supports 4.4 months of sales at the current sales pace, up from 4.0 in March.

For several years, there has been a shortage of homes for sale, especially at the lower end of the market, so experts were content seeing the inventory increase.

Related: 2021 Expected to Be a Sellers Market for Homeowners

Forbearance on Mortgage Loans Continues to Decline

Forbearance on mortgage loans continues to drop. The MBA’s Weekly Forbearance Survey puts the rate at 4.19%, a significant year-on-year improvement, which saw 8.36% of mortgage loans in forbearance.

Mortgage Rates Continue to Decline Through May

The 30-year fixed-rate mortgage (FRM) reached an average weekly low of 2.94% in May, down from a low of 2.97% in April. However, as the economy begins to reopen, mortgage and refinance rates should start to rise. It is just a matter of when this will occur.

Marimark Realty

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