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The expensive, inventory-starved housing market in 5 charts
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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation…
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Since the start of the coronavirus pandemic, the real estate industry has been in a frenzy. The housing market bucked the broader economic slowdown as COVID took hold and set record after record on the back of limited housing supply and historically low mortgage interest rates. Although mortgage rates have since risen, inventory remains low and the housing market is still super competitive. Data compiled by John Burns Real Estate Consulting shows just how weird things have been in real estate since 2020.
How much did mortgage rates really affect home sales?
Home sales were strong in 2020 and even stronger in 2021 despite limited inventory. It was probably that limited inventory that kept the rate of sales below record levels.
The supply of homes just could not keep up
Existing homes for sale plunged well below the normal average, and builders couldn’t churn out new dwellings fast enough. 2021 started out below the 2020 baseline and existing home inventory has yet to recover to pre-pandemic levels.
Consumer sentiment was clear: it’s a seller’s market
Conditions strongly favor sellers these days, and even as mortgage rates rise, competition among buyers remains fierce.
Builder prices keep going up
Construction costs trended upward throughout the pandemic, and have jumped significantly since the start of 2021. Builders have seen the costs of their raw materials going up, which is a major factor in consumer pricing.
Homeownership costs continue to outpace rentals
The cost gap between owning a starter home and renting widened in 2021, and though the trend shows little sign of reversing this year, costs do appear to be leveling out so far in 2022.
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.
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