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4 Reasons the Housing Market will Cool Down into a Long and Sustainable Boom

The homebuying sprint seen throughout the pandemic will soon give way to a long and healthy jog.

The dramatic housing-market boom of 2020 simply can’t last. The surge in home sales has left mere months of supply left, and contractors are struggling to keep up. Here are the four trends contributing to a shake-up in the housing market’s growth:

1. Construction will Catch Up

The shortage now serves as “an opportunity for homebuilders to pick up incremental demand,” the team added. It is estimated that another 1.8 million homes would need to be built to balance out the market.

2. Millennials Reaching Peak Buying Age

The population of 25- to 34-year-olds is 9% larger than the 35- to 44-year-old group, signaling to homebuilders that a wave of demand is on the horizon.

3. Home Inflation Set to Cool

Futures contracts suggest lumber prices will sink 26% through 2022, just as construction picks up to match robust demand.

4. Interest Rates have Room to Run

For one, mortgage rates still sit at relatively low levels. The average 30-year fixed mortgage rate stood at 3.13% this week. A pickup in supply could perfectly coincide with higher but not stifling mortgage rates.

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