November 2020 Home Sales Report

Hot Housing Market Continues into November

Date: December 21, 2020

MADISON, Wis. – Existing home sales continued to surge in Wisconsin as mortgage rates hit a new record low in November, setting Wisconsin on a record pace for sales while continued low inventory levels pushed home prices even higher, according to the latest monthly analysis of home sales by the Wisconsin REALTORS® Association. November home sales increased 15.2% compared to their levels 12 months earlier, and the median price increased 15.8% to $223,000. An evaluation of the year-to-date figures reveals that sales are up 5.7% compared to the first 11 months of 2019, and the median price has increased 11.4% to $220,000 compared to that period last year.

“Record-low mortgage rates have been the big driver of sales all year,” said WRA Chairman Steve Beers. He pointed out that this is now the eighth straight month in which the 30-year fixed-rate mortgage hit a new record low with the November rate nearly a full percent below the rate for November 2019 and almost 2% from two years earlier. “With lower rates, buyers can either lower their monthly payment or they can step up to a larger home for a given payment,” said Beers. For a buyer borrowing $200,000, their monthly payment for principal and interest would be $101 lower at current rates compared to mortgage rates this time last year, which is a savings of 11% on the principal and interest payment. Every region of the state experienced double-digit increases in sales, with all but one region up between 11% and 14.6%. The exception is the Southeast region, which increased 21.9% between November 2019 and November 2020. In that region, sales were particularly strong in the suburban counties surrounding Milwaukee as well as Racine and Kenosha counties. Collectively, November closed sales in those counties grew at 26.3% over the last 12 months. 

“Low inventories continue to be a challenge in this market,” said WRA President & CEO Michael Theo. A balanced market where there is neither a buyer’s nor seller’s advantage is considered to be six months of supply. “We’re selling homes faster than they’re coming on the market, which is leading to our persistent housing shortages,” said Theo. There is just 2.8 months of supply statewide, indicating a very strong seller’s market. New listings in November were on par with November 2019, but given the robust pace of sales this year, total listings are actually down 30.9% over the last 12 months. “Strong demand and tight supply continue to drive prices up, and our median price has remained above the $200,000 threshold since March, which is the first time we’ve seen that in Wisconsin,” he said. Home prices follow a regular seasonal pattern, rising in the summer and receding in the fall and winter months. While that pattern has continued, strong demand has kept the median price above $200,000 for each of the last three months. Year to date, the median price increased 11.4%, so it is likely that prices above $200,000 is the new normal. It is important to remember that this is well below the national median price, which was $317,700 in October. “Wisconsin home prices are definitely appreciating quickly, but our homes remain very affordable by comparison,” said Theo.

“In the immediate aftermath of economic lockdowns to control the spread of the virus, there were predictions of a V-shaped economic recovery, and the 33.1% bounce during the third quarter of real (inflation-adjusted) GDP would seem to support that claim, but the fourth quarter is shaping up to have more normal growth,” said David Clark, Marquette University economist and consultant to the WRA. The New York Federal Reserve Bank indicates that its real-time prediction of real GDP growth for the fourth quarter is currently around 2.5%. “The U.S. total nonfarm employment fell by more than 22 million jobs between February and April of this year, and by November, we had cut that loss to about 10 million jobs, which is good progress,” said Clark. He indicates that once the vaccine has been widely distributed, we can expect more robust economic growth. 

“It remains to be seen whether this is a V-shaped economic recovery, but the home sales are on record pace, and historic low mortgage rates make this an excellent time to buy a home,” said Theo. He pointed out that homes are moving quickly, and working with a REALTOR® who is experienced is still the key to success. “REALTORS® know how to effectively navigate a hot housing market to get families in the home that best fits their needs,” he said.

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