The housing market, like any market, is a balance of supply and demand. That means, conditions are a reflection of how many buyers and sellers there are, rather than the strength or weakness of the overall economy. For example, when coronavirus mitigation efforts shut down much of the country’s economy, there was a lot of speculation about what would happen to prices. But, though the economy suffered, home prices didn’t. In fact, they rose. According to the most recent CoreLogic Home Price Index Report, home prices increased 5.4 percent in April over last year at the same time. And, not only did they improve, they did so at a stronger pace than last April, when they were up just 3.6 percent. So why did home price gains accelerate while the economy was suffering a severe downturn? Well, it’s pretty simple, actually. When stay-at-home orders went into place, many home sellers pulled their listings and decided to wait a while before selling. The corresponding drop in for-sale inventory meant there were more home buyers than homes for sale, which led to more competition for available homes, bidding wars, and higher prices. (source)
