A new analysis by Redfin has found that, for the calendar year 2021, a record $2.53 trillion worth of home sales will transact in America—a 17% year-over-year gain and the largest annual increase in percentage terms since 2013.
Fueled by record-low rates, strong demand, and a wave of migration made possible by remote work, the market comes into a strong spring season after suffering some weather-related setbacks to start the year. These factors helped March become the hottest month in housing history, with home values, price growth and selling speed all hitting new heights.
"We expect 2021 to be an even more active year for the housing market than 2020 because homebuyers have a better sense of what the future looks like," said Redfin Chief Economist Daryl Fairweather. "Employers are providing clarity on permanent remote-work policies, the economy is recovering and mortgage rates remain low. All of these factors mean that we'll likely see even more buyers enter the market this year and in 2022."
According to Fairweather, home prices could grow more slowly if mortgage rates rise, resulting in a more balanced housing market, which could actually lead to more home sales.
The Southern part of the U.S. is expected to lead the charge, with $1.09 trillion of home sales forecast for 2021, followed by the West with $696.3 billion, the Midwest with $422.6 billion, and the Northeast with $322.8 billion.
Fairweather noted that the South has consistently held the top spot, but has inched further ahead in recent years, likely because it has more vacant land on which to build, and has attracted scores of out-of-town homebuyers who are in search of affordability and space.
And proof of a rising market in the South is evident in markets such as Atlanta, where Redfin Real Estate Agent Andrew Kolodey unprecedented bidding wars.
“Offering above a seller’s asking price was never the norm in Atlanta like it was on the West Coast, but now it is. Today, it’s typical for a buyer to bid $50,000 or $70,000 over the list price in order to win,” said Kolodey. “We’ve never experienced this level of competition. A bidding war here used to mean up to five offers. Now it means 15 to 20 offers.”