SEATTLE, June 30, 2020 /PRNewswire/ -- (NASDAQ: RDFN) — Pending sales the week ending June 21 have nearly returned to 2019 levels, down just 3% year-over-year, according to the latest weekly market report from Redfin (www.redfin.com), the technology-powered real estate brokerage. The recovery in pending sales follows a strong recovery in homebuying demand, which is now 30% above pre-pandemic levels. One of the biggest drivers of homebuyer demand right now is mortgage rates, which have continued to fall, hitting historic lows below 3% in mid-June.
Completed home sales were down 12% the week ending June 21 compared to the same week last year, but are expected to catch up in late July or early August as pending sales close.
"While we've seen a strong v-shaped recovery in homebuyer demand, mortgage applications and pending sales, lack of supply remains the biggest impediment to home sales growth," said Redfin lead economist, Taylor Marr. "Buyers can only buy what's for sale and sellers have been a bit slower to come back to the market. Though we have seen strong weekly improvements in new listings coming on the market, there aren't enough new listings to satisfy demand, creating more competition and pushing prices higher."
New listings are still down 9% from a year ago for the week ending June 21, a major improvement from the low point of 49% in mid-April. These new listings are selling fast with 47% going off market within just two weeks—the fastest rate since Redfin started measuring this data in 2012. As a result, the historic shortage in the number of homes for sale continues to worsen. The active inventory of homes for sale is now down 26% from a year ago, down from 25% a week earlier and 24% four weeks prior.
Price growth for newly listed homes continues to accelerate, rising 10% from a year ago. As a result, buyers are finding that there aren't many deals to be had.
Competition is Everywhere
Due to this increasing imbalance between the supply of homes and demand from homebuyers, 52% of offers made by Redfin agents faced competition during the week ending June 20, up from just under half during the month of May.
Redfin agents in Arizona, Massachusetts and Oklahoma all report competition for homes is intense, especially for entry-level, single-family homes:
- "Competition is at least as intense as it was before Covid-19, but what has changed is there are far fewer homes to choose from now, and buyers are feeling it. I can tell that some homebuyers are beginning to lose hope. Before when they would lose out on a property they'd sort of shrug their shoulders and say 'oh well, on to the next one.' Now though, losing a bidding war feels worse because there is a real concern about being able to find another home they love." - Oakland, CA Redfin agent Neal Conatser
- "Homes in the $100,000 to $175,000 price range are zooming off the market. Some are gone in hours or days. That first weekend and they are out." - Redfin Oklahoma City agent Jeni White
- "The market is super competitive right now. I had a listing go up on a Friday that had 20 showings, received multiple offers and sold for over asking price. That was on Father's Day weekend, when you don't typically have a ton of traffic." - Redfin Flagstaff, AZ agent Cody Bauer
Virtual Touring Declines as States Reopen
While Redfin agents report that some sellers still have health concerns about welcoming strangers into their home, the housing market is continuing to adapt to a new normal, even as new infections reemerge in pockets around the country. "Masks are standard protocol here pretty much anywhere you go," said Boston Redfin agent James Gulden. "People are getting more comfortable with wearing a mask and are opting to tour in person rather than over video."
For the week ending June 21, just 9.2% of home tour requests to Redfin agents were for video tours, down from a high of 25% in mid-April. Open house activity is also restarting in many places, but with coronavirus cases beginning to trend back up in some places, there's uncertainty on whether open houses will continue.
Will Real Economic Recovery Arrive Ahead of Stimulus Expiration?
"Perhaps the biggest question about how the continued stability of the housing market is whether or not the federal government will pass another stimulus package," said Marr. "Mortgage forbearance and increased unemployment benefits have helped to dampen the impact of record-high unemployment rates, but if these measures are allowed to expire before the economy is on sure footing again, the housing market could see a more serious disruption than what we experienced during the initial wave of shutdowns in March and April."
The housing market recovery will face its first test at the end of July when the additional $600 in weekly unemployment benefits authorized by the CARES Act are set to expire. While it is clear that people who earn enough to afford a median-priced home in the US are significantly less likely to be unemployed, what is not clear is the follow-on effect that the expiration of those benefits may have on the economy at large.
One positive sign is that the share of mortgages in forbearance declined slightly during the week ending June 14, the first such drop since the CARES Act passed at the end of March. Also, while new unemployment claims topped 1 million for the 14th straight week, the total number of unemployment claims fell slightly week over week.
To read the full report visit: https://www.redfin.com/blog/pending-home-sales-increase-from-low-mortgage-rates
Redfin (www.redfin.com) is a technology-powered residential real estate company, including brokerage, iBuying, mortgage, and title services. Founded by software engineers, we run the country's #1 most-visited brokerage website and offer a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. In a commission-driven industry, our mission is to redefine real estate in the consumer's favor. We do this by pairing our own agents with our own technology to create a service that is faster, better, and costs less. Since our launch in 2006, we have helped customers buy or sell more than 235,000 homes worth more than $115 billion.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email [email protected]. To view Redfin's press center, click here.