2021 Forecast & Pending Home Sales

We are finally closing the books for 2020, and even though we can see the light and the end of the tunnel, this was a deadly and challenging year for many Americans. Don’t forget over 340,000 of our fellow Americans died this year due to this Demon of the Devil.  https://coronavirus.jhu.edu/map.html

Our country made a comeback this year on the economic side of things, which still has much work left to do. I documented the recovery here as I retired the AB (America Is Back) economic model on December 9th.


This year was living in that dark tunnel, but now let’s get our real victory over the agent of death. Covid19 is our real enemy, not each other; together, we can defeat this virus.

My 2021 Forecast can be found on HousingWire here:


Those who have known me over the years know my years 2020-2024 tweets and talking points. Demographics and consumer’s financial balance sheets were much better going into this crisis than in 2008.

In line with my theme, housing would have its weakest recovery ever in the years 2008-2019. You can see the demographics back in 2010 weren’t the best for home buying; we were too old and too young to have specific housing metrics to be reached. The biggest age group in America back then was age 19.

The metrics I have always stressed were that purchase application data won’t get to 300 until years 2020-2024. Also, housing starts won’t start a year at 1,500,000 until this period. Only purchase application data has hit my target this year. We had 31 straight weeks of year over year growth to end the year averaging over 20% during this period.

From Calculated Risk:

Housing starts still has some work to do to start the year at 1,500,000.

Now in 2020, as you can see, the Census data looks a lot different. The biggest age group now is 29, and the median first-time homebuyer age is 33. So the age reference that I have used over the years gets one year added. Going from ages 26-32 to now 27-33 for 2021, let’s look at the numbers now.

This age group is running at 32,458,118! These people need somewhere to live. A big reason why home sales did so well this year because we weren’t working from an overheated housing cycle from 2008-2019. 2019 sales were flat at 5,300,000. For my trolling housing bubble boy crew, this is a big reason why your 30%-50% home price crash thesis for the last eight years didn’t work, especially this year. You need a massive drop in existing home sales to stick for some time. Like I stressed this year, it’s infrequent to have existing home sales come in at under 4,000,000 since 1996.

From Census: https://www.census.gov/library/visualizations/interactive/demographic-analysis-estimates-for-the-total-population.html

Existing home sales below 4,000,000 have only happened three times this century. Toward the end of the housing bubble crash, which runs into my weaker demographic patch thesis. The aftermath of the home buyer tax credit was a bad idea. Also, only one month of covid19 coma induced sales.

If you’re still doing the Housing Bubble Crash back to 1996 levels routine.

This means that you believe home sales will fall much more problematic in a Calendar year than what we saw from 2005-2008—this with our best housing demographic patch in history and the lowest mortgage rates ever.  Good Luck, Forbearance Crash Bros.

Regarding bond yields, I addressed that in my 2021 forecast. We still have a lot of headline risk, and we have not had a stock market correction or near bear market activity since the fall in March. We might even have a negative job report soon as our economy has limits while this virus is still infecting and killing Americans every day. Many American bears did not see the comeback; they will scare you into some type of depression talk. As long as we provide disaster relief and vaccinate more people each month in 2021, we will be ok.

From Advisor Perspectives:

Notice the difference in LEI data in this crisis compared to the 2008. This is what better demographics, better consumer balance sheets and fiscal and monetary disaster relief can do. You can really see this with the housing data, especially with housing permits. We have a blue print on the fiscal and monetary side here for every recession from now to the end of the days. Don’t forget this the next time around.

Regarding pending home sales. The data came in as a miss from estimates and a decline from month to month but up 16.4% year over year.

From the NAR: The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 2.6% to 125.7 in November, the third straight month of decline. Year-over-year, contract signings climbed 16.4%. An index of 100 is equal to the level of contract activity in 2001.

For months now, I have been focusing on this theme that housing data is going to moderate. We aren’t trending at near 7,000,000 total existing home sales for the year. What happened is that Covid19 has messed up all economic data lines, and we have waterfall dives and parabolic moves in housing data. If you take February’s existing-home sales print before Covid19 happened because housing data was the best in February since the early part of the century. Then total existing-home sales should end the year between 5,710,000 – 5,840,000. I have used this number for many months now to give people a marker to work with because if we don’t hit this level, then Covid19 took demand off the table for 2020. That is how good the housing data was before Covid19 hit us. We are just working our way back to those levels.

Remember, in the years 2020-2024, we have a healthy number of replacement home buyers, and if total home sales ( New + Existing) are over 6,200,000 in each of these five years, you should view it as a beat. Know the limits of home sales, and you won’t be led astray.

Have a safe and happy New Year, everyone, even my constant 24/7 American bearish friends; I can see that you and I are going to do this dance until one of us passes on to the afterlife.

“Hope smiles from the threshold of the year to come, whispering ‘it will be happier’…”

― Alfred Lord Tennyson

One last note, we have over 27 trillion in federal debt, the 10-year yield is still below 1%, and core inflation, both CPI and PCE, is below 2%. 

Logan Mohtashami is a Lead Analyst for Housing Wire, financial writer, and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami, now retired, was a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987.