The Red Hot Housing Market May Be Starting to Cool

December 16, 2020

Home-builder confidence slipped in December, breaking a three-month-long string of record highs. The National Association of Home Builders’ monthly confidence index fell four points to 86.

The index’s three main indicators, which measure sentiment regarding buyer traffic, current single-family sales, and expectations of future sales all slipped. The housing market has remained a bright spot as the rest of the economy has been battered by the pandemic, but some analysts think the market may be moderating.

Much of the sales activity was driven by historically low mortgage rates, but many buyers are beginning to see these rates as the norm rather than an anomaly to be taken advantage of. The pandemic has also driven many buyers, but with the vaccines on the horizon, the pressure to leave urban areas has lessened.

To be sure, any slowdown the housing market is seeing is relative to its recent highs. Even December’s “decline” in confidence remains the second-highest reading ever, and analysts expect the market’s strength to continue in 2021.

Read all Blog posts