Buyers who purchase newly constructed homes are paying more not only because of intense competition in the market but also surging lumber prices. Record-breaking growth for the cost of lumber is pressing on builders’ budgets and prompting them to pass along price increases to buyers.

The increase in lumber prices over the past year has added $35,872 to the price of an average new single-family home and $12,966 to the price of an average new multifamily home. The latter translates to an extra $119 per month in rent for apartment dwellers, according to new housing data from the National Association of Home Builders.

Some builders report slowing production due to the rising building costs. Still, single-family housing starts jumped 41% in March compared to a year earlier, according to U.S. Census Bureau data. More than a quarter of single-family homes that were on the market in the first quarter of this year were new construction—the highest share on record, according to Redfin research.

But lumber prices—up a whopping 340% compared to a year ago, according to Random Lengths, a wood products industry tracking firm—threaten that market share. For a new home, lumber is often used for framing as well as for cabinets, doors, windows, flooring, and decks.

Builders are facing rising costs for other building materials, too. For example, year-over-year prices are up nearly 7% for drywall, 27% for copper—the price of which set a record high this month—and 11% for land prices. Prices for single lots especially have jumped this year due to high buyer demand and low supply.

“There’s a literal land grab going on as builders are scooping up lots to better match housing supply with demand,” Ali Wolf, chief economist at Zonda, told CNBC. “The lot supply shortage is real, and it is causing prices to rise and builders to move further into the suburbs.”

With rising home prices, some markets have lost affordability, but a robust economy promises to help housing thrive in many areas of the country.

Realtor.com® and The Wall Street Journal identified the top markets with growing economies and booming housing markets in their brand-new joint Emerging Housing Markets Index. The index evaluates the nation’s 300 largest metros to identify the areas with strong housing demand, rising home prices, and strengthening economies, including jobs, restaurants, and retail.

“The areas that top our emerging housing markets list are places that have weathered the pandemic relatively well,” said Danielle Hale, realtor.com®’s chief economist. “Their economies are generally doing better than other markets, and they’re attracting a lot of home shoppers from other areas—likely, in part, due to the relatively widespread work-from-home flexibility in response to the pandemic.”

The markets in the top 10 emerging housing markets list are not cheap. Median list prices have appreciated 27%, on average, in the past year in these markets compared to 14% nationwide, realtor.com® notes. In the 300 metros analyzed, home prices averaged $519,100—about 42% higher than the $366,100 median price for the national market. But researchers said these markets command higher prices because buyers there can afford them. Unemployment is lower and wages tend to be higher in these metros.

“By design, these are great places to live,” Hale said. “Many of these areas are smaller, and they all boast great nearby activities—places for hiking, boating, and enjoying the outdoors. Housing trends in these markets have fundamentals that should mean buying a home is a good investment.”

The following are the top emerging real estate markets of 2021, according to the index:

1. Coeur d’Alene, Idaho: $799,000 (average home price)
2. Austin, Texas: $520,000
3. Springfield, Ohio: $144,900
4. Billings, Mont.: $428,500
5. Spokane, Wash.: $434,900
6. Lafayette, Ind.: $297,450
7. Reno, Nev.: $562,000
8. Concord, N.H.: $362,450
9. Manchester, N.H.: $419,950
10. Santa Cruz, Calif.: $1.22 million

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.