Despite a nearly 34% drop in closings year-over-year, hope is on the horizon for multiple states and cities with the return of summer – a time some expect will bring the return of deferred spring selling activity.
May, often the year’s second-strongest month for home sales, saw what many believe may be the biggest housing impact from the pandemic, according to the May 2020 RE/MAX National Housing Report. All 53 markets in the report sustained double-digit year-over-year sales declines. While the Median Sales Price of $272,000 was up 4.7%, it was softer than the 5.4% average May-to-May price increase in the previous five years.
However, leading indicators in the U.S. housing market, such as showing activity from ShowingTime data, point to an optimistic rebound as regions gradually open parts of the economy.
“Not surprisingly, May sales were historically muted alongside increasingly pinched inventory as the full brunt of the pandemic likely manifested itself during the month,” said Adam Contos, CEO of RE/MAX Holdings, Inc. “However, as the local outlook across the country increasingly pivoted to how soon stay-at-home restrictions might end, multiple leading indicators in the U.S. housing market have turned positive, some even on a year-over-year basis.”
Contos continued, “We believe the spring selling season was largely deferred for several weeks. And, with home being the center of people’s lives this year, we could see the effect of pent-up demand play out in a significant way. Absent another major coronavirus wave, inventory levels and the unemployment rate may well be the governors on how strong the housing market performs this year.”
A recent real estate outlook published by RE/MAX Canada on Europe, the U.S. and Canadian housing markets examined how consumer fears are beginning to subside as restrictions start to ease and activity picks up, particularly in secondary and tertiary markets, despite the decline in home sales. Countrywide, in-person showings and foot traffic to offices in many cities has now returned to levels seen in January, despite a market slowdown in March and April. A good example of this is Connecticut, where according to local office data, transactions in April were similar to levels experienced earlier in the year and in 2019.
“Buyers and sellers can’t depend on part-time agents to assist them in a process that’s even more complicated than normal,” RE/MAX Chief Customer Officer Nick Bailey said in the report. “Especially now, they need a full-time professional who understands the new environment and has the resources to keep them safe while guiding them to a successful closing.”
Ongoing housing supply challenges were evident in May housing data with the average Days on Market at 46 and the Months Supply of Inventory at 2.5 – both of which tied report records for May set in 2018.
Here are some highlights of the latest data found in the RE/MAX National Housing Report:
1. Sales Prices Moderately Increased
While price increases remained throughout most of the metros measured in the report, five metro areas saw a year-over-year decrease in Median Sales Price, with the largest decreases in Detroit, MI at -2.9%, Burlington, VT at -1.3%, and Houston, TX at -0.7%.
2. Homes Continued to Sell Faster
The average Days on Market for homes sold in May 2020 was 46, equal to the average in April 2020, and down two days from the average in May 2019. The metro areas with the lowest Days on Market were Seattle, WA at 22, Cincinnati, OH at 24, and Nashville, TN at 25. The highest Days on Market averages were in Miami, FL at 103, Des Moines, IA at 96, and Burlington, VT at 91. Days on Market is the number of days between when a home is first listed in an MLS and a sales contract is signed.
3. Demand Still Outweighed Supply
Inventory (the number of homes for sale) dropped 25% year-over-year to one of the lowest levels for May in the report’s 12-year history. Only Indianapolis, IN (12.7%), Wichita, KS (4.3%) and Chicago, IL (1%) posted increases in the number of homes for sale compared to May 2019. A six months supply indicates a market balanced equally between buyers and sellers. In May 2020, of the 53 metro areas surveyed, four metro areas reported a months supply at or over six, which is typically considered a buyer’s market. Those four markets were Indianapolis, IN at 6.4, Miami, FL at 6.9, New Orleans, LA at 6.1, and New York, NY at 9.6. The markets with the lowest Months Supply of Inventory were Albuquerque, NM at 0.9, Omaha, NE at 1.0, and a three-way tie between Charlotte, NC, Manchester, NH, and Denver, CO at 1.1.
If you’re looking to buy or sell this summer, a RE/MAX agent can provide help, information, guidance and expertise on all things related to real estate.
Written by Samantha Rotbart
