°Õ´Ç»å²¹²â’s highlighted a housing market in full swing during May 2021, when strong demand and insufficient supply pushed home prices up at a record-breaking 16.6% pace. The combination of historically-low mortgage rates, business re-openings and the lifting of pandemic restrictions fueled a buying frenzy with multiple bids, price escalation clauses and contingency waivers. The 10- and 20-city indices posted 16.4% and 17.0% gains, respectively. Price gains were widespread, with all 20 cities in the index recording higher yearly advances.
The index included prices from March, April, and May, a period when the economy and broader markets were welcoming a noticeable decline in COVID cases across the country. In addition, broad economic metrics were pointing to a strong continued recovery in manufacturing, service industries, healthcare, and importantly, travel and leisure. Moreover, with the massive fiscal stimulus of the past year, consumer prices experienced strong growth, raising the specter of longer-termed inflation. On the monetary side, the Federal Reserve indicated that it viewed the price trajectory as a temporary effect of global supply bottlenecks brought about by the pandemic.
For real estate markets, the summer buying season is fully underway, with many families seeking to take advantage of the current market and favorable financing to find their next home before the start of the school year. The good news is that a combination of factors is creating home buying opportunities. On one hand, mortgage rates have been dropping for a month, moving toward the lows we saw in January and February of this year. On the other hand, more homeowners are entering the market, with the number of freshly-listed homes for sale advancing in 14 of the last 17 weeks. This dynamic confluence of housing developments is helping keep price growth in check as we approach August. Looking at the months ahead, we expect inventory to continue growing into the fall, shifting the typical seasonal trend and keeping real estate activity on a roll.