January 2021 Home Sales Report Strong Housing Market Continues into 2021 Date: February 22, 2021
MADISON, Wis. – Following a record year for home sales in 2020, the Wisconsin existing home market started the new year on record pace even as inventories continued to tighten statewide, according to the most recent analysis by the Wisconsin REALTORS
® Association (WRA). January home sales increased 9.8% compared to that same month last year, and the median price rose 10.5% to $210,000 over that same period. This established a new January record in Wisconsin for both home sales and the median price, according to the report.
“January is typically the slowest month of the year, so it’s encouraging to see such a strong market to start 2021,” said WRA Board Chair Mary Duff. In a typical year, the month of January accounts for just 4.8% of annual sales. In contrast, sales usually peak in June, and the volume is nearly two and half times greater, accounting for 11.6% of sales. Duff cautioned that the record pace is unlikely to continue due to a severe shortage of homes for sale. “Unfortunately, January ushered in another Wisconsin record, and that’s record-low inventories,” said Duff. There was just 2.1 months of available homes for sale in January, down from 3.5 months a year earlier. The last time there was a balanced market in the state was in summer 2017 when there was about six months of supply, and it has been a seller’s market ever since. “Going forward, we may be able to surpass the depressed level of home sales last spring, but we will struggle to keep pace with 2020 unless inventories improve,” said Duff.
She noted that inventories are tight in all regions of the state, ranging from 2.5 months of available supply in the North region to just 1.9 months of inventory in the South Central and Southeast regions. “This isn’t just a problem in the large cities; inventory is even tight in rural areas,” said Duff. Between January 2020 and January 2021, rural inventory fell from 5.9 months to just 2.7 months of supply, which is a 40% reduction over just 12 months.
“Very low mortgage rates are fueling demand, and with such limited supply, it’s really driving up home prices,” said WRA President & CEO Michael Theo. The 30-year fixed-rate mortgage stood at just 2.74% in January, which is nearly a full percent below the January 2020 rate of 3.62%. “These are great rates, and as a result, homes are moving quickly, often with multiple offers, which can push prices above the asking price,” said Theo. In 2020, the median price rose at an average annual rate of 11.4% compared to 2019, and the annual pace of growth was similar, rising 10.5% in January 2021. “Wisconsin housing affordability barely changed as the lower mortgage rates offset the higher prices, but that may be changing,” said Theo. The 30-year rate ticked up slightly in January after recording 12 straight months of decline and hitting a record low of 2.68% in December 2020. “Once mortgage rates begin moving up, the combination of increasing prices and increasing mortgage rates will definitely start to erode our affordability,” said Theo.
“The pandemic continues to impact the pace of economic recovery, and while Wisconsin saw solid job growth between May and September, that growth stalled in the last quarter of the year as COVID cases spiked,” said David Clark, Marquette University economist and consultant to the WRA. The total number of nonfarm jobs fell by 475,600 jobs between February and April as the state went into lockdown, but then added 264,300 jobs over the May through September period, before dropping by 3,000 jobs in the last quarter. “The key to more sustained job growth is widespread COVID-19 vaccination in the state,” said Clark. As of mid-February, approximately 13% of Wisconsin residents had received at least one dose of the vaccine. “Hopefully the pace of vaccinations will increase so that more of the economic restrictions can be lifted and job growth can accelerate,” he said.
Winter is a time where there is less competition in the housing market, which may provide an opportunity for buyers who remain active in their search. “Even in this tight market, there are bargains to be found, and a REALTOR
® who is experienced can help you find the home that best fits your family’s needs,” said Theo.