Home listing volume drastically down from seasonal average: Report
As the coronavirus takes a major toll on housing inventory and credit availability, pent-up buyer demand could help the market recover, according to Redfin.
Ramifications of the pandemic are clear, with reports revealing lower home listing numbers in early spring — a time of year normally teeming with new properties for sale. Listings in every price range among the 50 largest metro areas in the U.S. dwindled. Between March 15 and April 20, the supply of homes for sale under $250,000 rose 34% compared to 59% over the equivalent period a year ago.
The top end of the marketplace — homes priced at $1 million and up — actually saw more listings taken off the market than added, with a -1% drop compared to a 28% increase in 2019. Across all price points, the number of listings fell an average of 27.6 percentage points year-to-year.
"Owners of much more expensive homes are seeing a slack in demand, likely because buyers of higher-end homes have been influenced by tight credit for jumbo loans and volatile economic and financial market conditions," Taylor Marr, Redfin's lead economist, said in a press release.
Across the 50 metro areas surveyed by Redfin, San Francisco's supply of available homes declined most in this period, with a 75-percentage-point drop. Its annual listing growth went to 32% from 107%. Boston's 66-point plunge followed, going to 31% from 97% the year before. Detroit and San Jose, Calif., saw drops of 56 and 55 points, respectively.
Only Salt Lake City and Phoenix added more for-sale properties year-over-year. Listings rose 6 percentage points in Utah's capital, going to 72% from 66%, while the Arizona capital posted a 5-point progression with its supply growing 54% compared to 49%.
Reduced inventory can be attributed to the overall economic uncertainty. With banks and lenders cautious of forbearances and defaults mounting in COVID-19's wake, credit availability bottomed-out to a five-year low in March.
"Thousands of Americans who were priced out of the housing market due to the affordability crisis of the past decade might finally see homeownership as within reach, especially given historically low mortgage rates. But unfortunately, they are now faced with another roadblock and may not be able to get a loan," said Sheharyar Bokhari, Redfin's senior economist.
Clamped lending standards create a tougher landscape to sell a home by narrowing the field of potential buyers. The dearth of affordable starter homes where the majority of first-time homebuyers shop, however, is nothing new. Sellers within this range are still experiencing plenty of demand, even in the midst of the coronavirus pandemic, Marr noted.
After demand fell 34% in March from February, Redfin's Homebuyer Index v-curved in the last three weeks of April. On a seasonally adjusted basis, purchase demand only sits 15% below pre-coronavirus pandemic levels for the seven days ended on Sunday, April 26.
Homes on the lower end of the price spectrum are "still selling like hotcakes," Redfin said in its latest weekly demand report. This segment could help the overall market smooth the bumps brought by the pandemic. Redfin agents across the country reported the more affordable single-family properties produced the most bidding wars with prices escalating upwards of tens of thousands of dollars over asking.
With an especially disparate supply, sellers aren't coming down and accepting low bids. "In the end, buyers are paying up to hit the seller's bottom-line number," said Graham Rogers, a South Carolina-based Redfin agent.