What to Expect in the 2021 Housing Market

By: Kelly Leighton on  in 


The 2021 housing market should resemble a return to normalcy, realtor.com® predicts.

Home sales are forecasted to be 7% higher than 2020, with a strong spring and summer and a less-busy fall and winter, unlike 2020. While inventory will still remain an issue, it is expected that there will be more properties on the market and the gap between demand and availability will begin to shrink. Additionally, single-family housing starts are predicted to rise 9% compared to 2020, helping the demand.

Affordability may remain an issue for 2021. Mortgage rates, which reached historic lows in 2020, will rise, but still remain reasonable. It is expected they will average 3.2% for most of the year, before increasing to 3.4% by the close of 2021. Home prices are also expected to see a jump. Year-to-year, home prices will go up 5.7%.

Millennials and Generation Z members are expected to influence the housing market as well, as some older millennials may be ready to shift to a larger house, freeing up their starter homes for younger millennials and the older Generation Z members who want to purchase their first home. However, putting down a smaller down payment and taking on a larger mortgage to be able to buy now may hinder them in the future.

With so many people working from home indefinitely, expect to see home offices prominently displayed in property listings. “While a majority of home shoppers reported a preference for working remotely, three-quarters of workers expect to return to the office at least part-time at some point in the future. However, the ability to work remotely was a factor prompting a majority of respondents to buy a home in 2020. This was the case even when most expected to return to offices sometime in 2020,” said Danielle Hale, realtor.com® chief economist.

Ultimately, 2021 will remain a good market for sellers, while buyers will see more favorable conditions than 2020 due to an increase in available inventory.