The breakneck pace of home price growth nationwide has caused more markets nationwide to become overvalued, according to a new report from Fitch Ratings.
Fitch analysts estimate that home prices are 5.5% overvalued nationally as of the fourth quarter of 2020. Through November, national home prices were up some 8.9% since the start of the year, driving the overvaluation in the marketplace, they argued.
“Even though home price growth accelerated in 2020 due to low mortgage rates and demand/supply imbalance, the economy has not caught up,” the analysts wrote. As MarketWatch has reported, the demand among home buyers has far exceeded the inventory of homes for sale.
To some extent, this is a reflection of the fact that many homeowners are reluctant to list their homes for sale amid the pandemic. The imbalance between supply and demand is also the result of homebuilding activity remaining muted following the Great Recession