Can the Demand Be Met?

 As new home construction begins to provide positive energy in the national real estate market, the Capital Region’s March market also showed signs of an encouraging spring. Increasing vaccines and jobs brought buyers and sellers out and ended March with closed sales at 24 percent higher than March 2020. Pending sales increased by 20 percent with new listings showing a 9 rise over this time last year. 

New construction brought 192 new homes to market – a 7 percent increase over March 2020. Pending new homes increased by 51 percent with the median new construction price hitting $400,000; a 6 percent increase over March 2020. Mortgage rates started the year out around an all-time low but have begun trending upward causing movement among homebuyers. According to Freddie Mac, the average 30-year mortgage rate sat at 3.18% as of April 1 — up from 2.65% in early January but still very affordable. 

Facing a supply and demand challenge, existing single-family home prices continued to rise as the region’s inventory of homes for sale hit a record low of 1.8 months. The median sales price increased 13.3 percent to $239,047. In a win-win, not all buyers landed in competitive bid situations and Sellers received 97 percent of the original list price and a Sold sign on the front lawn within 56 days. 

Greater Capital Association of REALTORS® President, Jeffrey Decatur, of Re/Max Capital, remarked, “Although purchase demand is strong, some buyers are feeling pressure from the tip in mortgage rates and rising home prices. The expectation of submitting a lower offer and negotiating up is not the market we’re in right now. Buyers must carefully weigh their options and make a prompt decision if they want to secure a house in the current market.” 

Existing home seller and new construction activity continue to remain below the levels necessary to bring the market back into balance, pointing to a busy and competitive buyer market in the coming months. 

GCAR CEO, Laura Burns, commented, “The low inventory levels market-wide are, and by all reports will remain to be, a challenge for the country and the Capital Region for the foreseeable future. However, it’s still early spring – so long as they can obtain the materials they need, builders have time to gain some ground on inventory.”