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The fast-spreading delta variant of the coronavirus is prompting more pandemic precautions to return. It’s also affecting the hot housing market and likely will continue to be housing’s wild card over the next few months, economists say.
The delta variant has led to volatile financial markets and some economic uncertainty. Recently, that has prompted mortgage rates to drop, opening another door for home buyers to snag record low mortgage rates. The 30-year fixed-rate mortgage dropped to a 2.77% average last week, nearing its all-time lows, according to Freddie Mac.
“It’s hard to say how it’s going to affect the housing market,” said Danielle Hale, realtor.com®’s chief economist, of the delta variant. “The next couple of months are going to be pretty key to see which gear the housing market [shifts] into.”
The fears of a more contagious version of the coronavirus could prompt some homeowners to delay selling their home, which would press on inventory levels just as they were starting to see some improvement. If buyer demand stays high and inventories fall again, that could then press on home prices even more and ignite more bidding wars for limited housing stock.
“You might see another rush [into the market] if restrictions tighten back up, if people feel there’s another possibility of another lockdown,” psychotherapist Jaime Saal, executive director of the Rochester Center for Behavioral Medicine in Michigan, told realtor.com®.
Home prices continue to press higher from the still-ongoing homebuying rush sparked by the pandemic. The median existing-home price for all housing types was $363,300 in June, a 23.4% jump compared to a year earlier, according to the National Association of REALTORS®.
“I don’t think delta is going to dent the housing market unless it starts to elude our vaccinations to the point where we start self-quarantining and schools start shutting down and we go backward on reopening,” Mark Zandi, chief economist of Moody’s Analytics, told realtor.com®.