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The U.S. housing market is thriving despite the challenges surrounding the coronavirus pandemic. Prices are rising and homes are selling faster compared to 12 months ago. Despite higher prices, homes are still more affordable than they have been in years.

Pending Sales Up 16.9%

According to Zillow’s Weekly Market Report, newly pending sales are up 16.9% year over year and prices are rising. Although there were more listings added last week compared to the previous week, inventory fell further, as buyer demand continues to surge. Demand is rising in both urban and suburban areas.

Homes are Selling Faster, But Inventory is Still Low

Homes are selling more quickly compared to the same period last year. On average, homes sold last week were only on the market for 13 days. During this period last year, homes were on the market for an average of 24 days before going under contract.

Some markets are hotter than others. In Kansas City, Cincinnati, Raleigh and Columbus, homes went under contract after just four days of being on the market.

Although there were 4.3% more new listings added to the market compared to the previous week, there are still 13.2% fewer listings compared to last year. Total inventory is now down 27.6%.

Both urban and suburban areas are seeing growth and higher demand, with the notable exceptions of San Francisco, Manhattan and the national rental market.

Some markets saw significant increases in newly pending sales year over year, including:

  • San Diego, CA: 197.8%
  • San Antonio, TX: 53.4%
  • New York/Newark: 46.2%
  • Chicago, IL: 39.4%
  • Detroit, MI: 31.7%
  • San Francisco, CA: 30.9%

Prices are Rising

List and sale prices continue to rise. Last week, the median list price was $344,660, up 7.3% compared to last year. The median sale price was $269,700, up 1.8% from the same period last year.

Homes are More Affordable Than in Years

Despite rising prices and low inventory, homes are more affordable than they have been in years, according to Black Knight’s Mortgage Monitor Report. The affordability factor is thanks to record-low mortgage rates.

According to the report, buying an average-priced home only required 19.8% of the median monthly income. This figure assumes that buyers put 20% down and take out a 30-year mortgage. The figure is 5% lower than the average of 25% of income required from 1995-2003.

Although home values have risen by more than $12,000 compared to last year, monthly payments are down 6%, according to Black Knight. Buying power, as a whole, is up 10% compared to the same period last year. This means that buyers can afford almost $32,000 more than they could last year.

Mortgage rates have hit all-time lows eight times this year, making it even less expensive for buyers to borrow money.

In some states, homes haven’t been this affordable in over 25 years:

  • Kentucky
  • Arkansas
  • Maryland
  • Louisiana
  • West Virginia
  • Iowa

With record-low mortgage rates, now is the ideal time for renters to make the transition to homeownership or for existing homeowners to make a move.