Home Prices to Grow in 2021

After recording the quickest recovery in the nation's history in the wake of the COVID-19 pandemic, the U.S. economy is expected to kick into higher gear in 2021.

With the number of vaccinated Americans increasing and new coronavirus cases on the decline, the economy will grow 4.5% in 2021. Consumers will begin to spend massive savings, and do more shopping, restaurant dining, traveling and in-person house hunting.

Housing Market Remains Strong

While home sales continue to be an economic bright spot, the economic recovery, propelled by favorable monetary and fiscal policies, has created the hottest housing market in nearly 50 years. The marketplace has surpassed pre-pandemic levels in terms of sales, but the fast-paced recovery has contributed to historic home price growth.

Mortgage Rates Expected to Rise

The economic recovery, both in the U.S. and globally, has raised inflationary pressures which will ultimately lead to an increase in the 30-year fixed mortgage to an average of 3.2% in 2021.

Price Growth Expected to Moderate

As mortgage rates increase, the frenzied multiple-offer situation will become less prevalent by year's end, as affordability challenges squeeze out some buyers and more inventory reaches the market. The median existing-home sales price will increase at a slower pace of 7% in 2021.