Since mid-March, the real estate industry has been heavily impacted by the COVID-19 pandemic, with market slowdowns reported across the country. But despite a steep drop off in the first few weeks since the country went on lockdown, it seems things are slowly improving.
As states develop plans to reopen, buyer and seller confidence is growing. Here are 10 positive trends that could signal an impending market upswing.
1. New home sales are starting to climb.
In the initial four weeks of the shelter at home order, sales of newly built homes were down 85% from normal spring activity at the same time last year.
But in the past two weeks, those numbers have increased 20% from their initial drop off, according to John Burns Real Estate Consulting, which tracks hundreds of builders nationwide. Even though they are down year over year — sales are recovering.
The upswing has been attributed to a wave of renters who are seeking to leave their apartments for permanent dwellings.
2. The flow of new listings is trending up.
According to Zillow, new listings were up 14% nationwide at the beginning of March, but slowed dramatically until April 17, when new listings were down 43.8% from this time last year.
But over the weekend of April 18-19, new listings began to trend upward and were down just 37.7% year-over-year by April 19.
3. Pending sales activity is no longer falling.
In recent weeks, pending sales activity has begun to rebound. By March 22, pending sales had fallen below 2019 levels, declining as much as 38.5% from a year ago by April 14. But they rebounded 6.2% by the end of the following week.
4. Overall inventory has reached record lows.
The total number of listings active at any point in March fell to a new seasonally adjusted record low of 1,429,267, down 9.5% from March 2019. While that might not seem like good news, it means that despite shrinking purchase activity, there is not yet a buildup of unsold inventory. Enough sellers have pulled out of the market to balance out the supply and demand of homes across the country. This is in contrast to the 2005-2006 housing market, which saw an overabundance of unsold homes and eventually stalled price growth.
5. Home prices are up from last year.
Despite predictions, home prices are up during the coronavirus pandemic. The median home list price was up 1.6% in the week ending April 25 compared with the same week a year ago, according to the most recent national data from Realtor.com based on the 99 largest metropolitan areas. Real estate experts had predicted price growth would level off or dip.
6. Mortgage rates have dipped to a record low.
Mortgage rates reached a new record low this week, with the 30-year fixed-rate mortgage falling to its lowest average ever since Freddie Mac began tracking data in 1971. Low rates are driving higher refinance activity and have helped improve purchase demand.
Freddie Mac reported the following national averages for the week ending April 30:
30-year fixed-rate mortgages: averaged 3.23%, with an average 0.7 point, falling from last week’s 3.33% average. A year ago, 30-year rates averaged 4.14%.
15-year fixed-rate mortgage: averaged 2.77%, with an average 0.6 point, falling from a 2.86% average. A year ago, 15-year rates averaged 3.60%.
5-year hybrid adjustable-rate mortgages: averaged 3.14%, with an average 0.4 point, dropping from a 3.28% average. A year ago, 5-year ARMs averaged 3.68%.
7. Mortgage applications are on the rise.
Given these record-low mortgage rates, mortgage applications for home purchases saw a 12% uptick last week, reversing a month of falling activity, according to the Mortgage Bankers Association. Housing experts say it could be a sign that buyer confidence is on the rise.
8. Visits to for-sale listings online is rebounding.
Web traffic to for-sale home listings on Zillow fell off dramatically in mid-March. But by mid-April, overall visits to for-sale homes had rebounded to levels that are actually slightly higher than a year ago.
While traffic to listings in some markets still remains down from a year ago, the national total has rebounded significantly, up 13% from a year ago for the week ending April 13.
9. 35% of agents report no closing delays.
According to a new report from the National Association of Realtors®, more than a third of real estate professionals say closings are occurring on time. Thirty-five percent of Realtors reported no delays to closings on a survey conducted April 26 and 27.
Recent NAR data also showed a quarter of Realtors had clients put contracts on homes the week of April 12 without even physically seeing the property. Similarly, 58 percent of Realtors reported that buyers are using virtual tours and 43% said buyers have taken advantage of e-closings.
10. Agents are adapting to the changing climate.
While it does appear the real estate market is looking up, it likely won’t return to normal levels overnight. Agents should still take measures to protect themselves and their clients and conduct business virtually when possible.
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