Many American households are feeling richer, sitting on the nest egg they’ve built during the pandemic. Those savings may be released into the economy in new spending this spring and summer, which will bode well for the already surging housing market.

Personal savings increased to a 21% annual rate in the first quarter of this year, reaching the second-highest level on record, according to the Bureau of Economic Analysis. Many Americans saved cash from the federal government’s COVID-19 stimulus programs, and those who have remained employed have been able to save money after sheltering in for months, decreasing spending on gas, clothes, entertainment, and travel.

“Consumers have lots of cash available thanks to stimulus and extremely high savings and will be looking to spend, especially on services,” Gus Faucher, chief economist of PNC Financial Services, told MarketWatch. “Rising vaccination rates and a greater willingness to go out in public will also support consumer spending.”

The reopening of the economy and federal stimulus funds led to a 6.4% annual GDP gain in the first quarter, the government reported this week. “The economic recovery now is quicker and stronger compared to the recovery [following the Great Recession] thanks to a quick and powerful dose of monetary expansion and strong fiscal spending that propped up consumer and residential investment spending,” Gay Cororaton, research economist at the National Association of REALTORS®, writes for the association’s Economists’ Outlook blog. A strong housing market also likely will continue in 2021 with sustained economic growth, declining unemployment, and mortgage rates hovering at historic lows, Cororaton notes.

Consumer spending accounts for 70% of the economy. The National Association of REALTORS® predicts GDP growth to reach 4.5% in 2021, mortgage rates to average 3.2%, and existing-home sales to increase 10% to 6.2 million units.

From the paint colors to the layout and location, a person’s home can significantly impact his or her mental health, according to a new survey from Sears Home Services of more than 1,000 consumers. The survey found that the following property attributes contribute most to a person’s satisfaction with his or her home:

• Security and safety: 54.4%
• Location: 52.7%
• A section of the home dedicated to relaxation: 51.4%
• Privacy: 49.3%
• Size: 46.4%
• Living situation (housemates): 45%
• Outdoor space (garden, balcony, etc.): 43%

On the other hand, respondents indicated the following features contribute most to dissatisfaction with a home, according to the Sears Home Services survey:

• Noise level: 26.7%
• Size: 24.9%
• Proximity to neighbors/other homes: 22.8%
• Pests: 21.6%
• Design choices: 21.6%
• Lack of privacy: 20%
• Lack of outdoor space: 20%

Homes are selling in record time at an average of 43 days—20 days fewer than a year ago, according to realtor.com®’s latest Monthly Housing Trends Report. The market is experiencing Intense buyer competition, though inventory opened up slightly in April as more sellers started to list their homes. New listings, however, are still nearly 26% below pre-pandemic levels, the report shows.

In some parts of the country, listings are going from “just listed” to “sold” in what seems like a blink of an eye in real estate terms. Here’s where homes sold the fastest on average this month:

• Denver: 15 days
• Columbus, Ohio: 16 days
• Austin, Texas: 18 days

NAR’s Latest Pending Home Sales Report: Despite Housing Shortages, Contract Signings Climb

As buyer demand remains high, listing prices soared 17.2% annually to a new high of $375,000, according to realtor.com®. “When compared to pre-pandemic levels, it is very clear we are still not on par with the number of sellers we saw in 2017 through 2019, which is helping to drive one of the most competitive seller’s markets of all time,” says Danielle Hale, realtor.com®’s chief economist. “Home prices are continuing to surge and sales are occurring nearly three weeks faster than a normal spring homebuying season.”

Hale predicts that more homeowners will list their homes over the coming months. But with 554,000 fewer homes on the market in April than a year ago and buyer demand at all-time highs, home prices will likely continue to reach new highs. Hale says prices likely will reach their peak in July or August.

© realtor.com®

Home buyers had another opportunity to snag ultra-low rates this week. The 30-year fixed-rate mortgage averaged 2.98%, Freddie Mac reports.

“In light of the rising COVID-19 caseloads globally, U.S. Treasury yields stopped moving up a month ago and have remained within a narrow range as the market digests incoming economic data,” says Sam Khater, Freddie Mac’s chief economist. “The good news is that with rates under 3%, refinancing continues to be attractive for many borrowers who financed before 2020. But for eager buyers, especially first-time home buyers, inventory continues to be extremely tight, and competition for available homes to purchase remains high.”

The National Association of REALTORS® estimates mortgage rates to average 3.2% by the end of the year.

Freddie Mac reports the following national averages with mortgage rates for the week ending April 29:

• 30-year fixed-rate mortgages: averaged 2.98%, with an average 0.7 point, rising slightly from last week’s 2.97% average. Last year at this time, 30-year rates averaged 3.23%.
• 15-year fixed-rate mortgages: averaged 2.31%, with an average 0.7 point, increasing from last week’s 2.29% average. A year ago, 15-year rates averaged 2.77%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.64%, with an average 0.3 point, dropping from last week’s 2.83% average. A year ago, 5-year ARMs averaged 3.14%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining a mortgage.

Homes with pools have become the target of buyer envy since the pandemic began. Pool additions are soaring, and more house hunters say they want one in their backyard, according to HomeLight’s “Top Agent Insights for Spring 2021” report.

Prior to the pandemic, many buyers were shunning properties with pools, which present maintenance issues and potential liability. The average pool can cost between $3,000 and $5,000 per year to maintain, according to HomeAdvisor data. Only 2% of REALTORS® in 2018 said that a pool helped to sell a home, according to data that year. But the pandemic has made Americans reevaluate their fondness for pools, which have become a mode of entertainment while sheltering at home. Pool sales have tripled in the last year.

Properties with an in-ground pool are selling for a premium, too. Real estate professionals surveyed by HomeLight estimate that prior to COVID-19, a house with a pool would net about $16,137 more than a similar house without one. But today, a house with a pool would sell for an estimated average of $27,199 more, industry experts say. However, the cost to install an in-ground pool—an average of $42,480 but upwards of $100,000 to $150,000 for an upscale version—is much more than its potential ROI.

Demand for pools is expected to continue being strong this spring and summer. Sixty-eight percent of real estate professionals say they expect a surge in pool additions in their markets. Pool mania isn’t happening only in warmer climates, though. In the Northeast, the additional value that a pool beings has increased by 113%, according to HomeLight’s report. A home with a pool in the Northeast prior to the pandemic fetched about $14,968 more than a house without one; now such homes would sell for an estimated $31,847 more, according to the report.

Home prices are rising quickly, bidding wars are common, and housing shortages abound: It’s not easy to be a home buyer this spring. “I have been in the business for more than 30 years, and I’ve never seen a market this hot,” Glenn Brunker, president of Ally Home, told CNBC.

Real estate pros are working hard to prevent buyers from feeling remorse after frantically jumping into the market. Figuring out the buyers’ finances is key, real estate pros say. “Come up with a number first,” Jacqueline Cooper, founder and president of Financial Education Associates in Dorchester, Mass., told CNBC. “What you can afford is going to guide not just your principal and interest payments but also taxes and insurance payments.”

Home buyers are heading into transactions quickly, but they need to take into account the full costs of homeownership to truly know what they can afford, such as costs for homeowners associations, sewer and trash maintenance, and utility fees. A mortgage preapproval also is necessary before house hunters start their search, real estate pros say. With a preapproval, a lender reviews the borrower’s finances and provides a specific loan amount for which the borrower qualifies. Also, giving sellers more time to find a new home may be another way to make an offer more attractive. Some first-time buyers are finding that this extra time allotment is a better way to compete against other offers.

Waiving contingencies has grown more common in bidding wars, but it can be a gamble and lead to buyer’s remorse later on. You should talk thoroughly with your clients about waiving inspection or appraisal contingencies so they understand the risks. Also, have more talks about competing in a bidding war so your clients make a smart financial decision. Some buyers may get so involved in a biding war and the idea of winning that they take on more than they can comfortably afford. “It doesn’t matter what the highest bid is and whether you can beat that if you don’t have the money,” Cooper told CNBC.

Buyers are increasingly turning to newly constructed homes for more options. Sales of new single-family homes surged 20.7% month over month in March to a 1.02 million seasonally adjusted annual rate, according to new data from the Department of Housing and Urban Development and the Census Bureau. New-home sales are at the highest annual pace since September 2006.

“Our members are seeing strong buyer traffic as continued low mortgage rates are helping fuel sales,” says Chuck Fowke, chairman of the National Association of Home Builders. “However, builders are still grappling with major supply chain issues and soaring materials costs, which are causing construction delays and preventing them from adding to the already very low inventory.”

Builders are facing particular challenges because of rapidly rising lumber prices, which nearly doubled over a four-month period in 2020 and have continued to reach new highs. To help offset increasingly expensive prices, more builders are adding escalation clauses to their sales contracts.

Many builders are increasing their home prices due to the rising costs of materials. As such, “housing affordability remains a major concern,” says Danushka Nanayakkara-Skillington, the NAHB’s assistant vice president of forecasting. “With building material pricing, the challenge for builders in 2021 will be to deal with higher input costs while making sure home prices remain within reach for American home buyers.”

The median new-home sales price was $330,800 in March. Inventories dropped to a 3.6-month supply last month, and sales contracts for homes that haven’t been built yet surged 150% year over year—an indicator of housing delays and higher construction costs, the NAHB notes. On a regional basis, new-home sales saw the biggest upticks last month in the Midwest, up 53.9% annually, followed by a 50.5% increase in the South and a 36.6% increase in the Northeast. Meanwhile, new-home sales declined 3.3% in the West.

Million-dollar listings are a hot commodity. The number of homes sold for more than $1 million jumped by 81% in February compared to a year earlier. Meanwhile, the number of homes sold for under $100,000 dropped 26% compared to a year ago, according to data from the National Association of REALTORS®.

Wealthy Americans are taking advantage of low mortgage rates, increased savings, and the growth in remote work in order to hunt for larger homes.

The Midwest saw the volume of homes sold for above $1 million double from February of this year compare to last year. The Northeast saw a 98% increase and the South posted a 94% increase.

Economists note that a shortage of homes for sale in the $250,000 and lower category as well as job losses in lower wage earning categories of the economy may be the culprit behind the drop in sales in the lower price brackets.

“There are people who have become much wealthier as their stock portfolios rise and they aren’t spending money on other things besides housing,” says Daryl Fairweather, Redfin’s chief economist. “They are not going out to restaurants or on vacations, and they want to spend their money on housing, spending more time at home.”

Luxury homes are selling faster than they have in the past too. The typical luxury home for sale during the first three months of this year spent 61 days on the market, which is 38 days fewer than a year ago, USA Today reports.