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Early Data Point to Slight Housing Turnaround After Initial Coronavirus Pullback (March 2020 Market Report)

Jeff Tucker
  • Pending home sales slowed dramatically in the second half of March, but may have turned a corner in recent days and are up 6.2% week-over-week.

  • New listings continued to fall in April, down 37.7% year-over-year in the week ending April 19.

  • According to the Zillow Home Value Index, the typical home in the U.S. was worth $248,857 in March, up 4.1% year-over-year.

Note: Zillow Economic Research is piloting three new daily metrics — daily new active listings, daily new pending listings and daily median list price — in an effort to bolster our usual monthly data and provide more timely signals about the housing market during this unprecedented health and economic crisis.

The housing market roared into March like a lion but bleated out like a lamb as sellers and buyers retreated from the housing market in the wake of coronavirus-driven uncertainty and social pullbacks. But early indications hint at some green shoots emerging in April.

This month, Zillow is releasing three newly compiled housing metrics to provide a higher-frequency, more-responsive look at the rapidly changing housing market:

  1. Daily new active listings: A tally of newly listed homes flowing into the overall pool of active inventory

  2. Daily new pending listings: The number of listings on Zillow that switch from active to pending status each day

  3. Daily median list price: The median asking price of homes listed for sale on Zillow.

Flow of New Listings Trending Up

Because new active listings typically follow a strong seasonal pattern, rapidly rising every spring, we focus on year-over-year changes comparing Spring 2020 with Spring 2019. Nationwide, new listings were up 14% at the beginning of March, but the flow of new listings progressively slowed to a trickle from then until last Friday, April 17, when new listings were down 43.8% year over year. But over the weekend of April 18-19, new listings began to trend upward, and were down only 37.7% year-over-year by April 19.

Among large metro areas, Pittsburgh (-68.5%), Detroit (-64.9%) and New York (-57.6%) have experienced the biggest year-over-year declines, while new listings in Minneapolis-St. Paul (-11.4%) and Cincinnati (-14.1%) have fallen off the least.

Pending Sales Activity No Longer Falling

One possible reason sellers are beginning to dip their toes back in the water is the news that pending sales have begun to rebound noticeably, and are now up 6.2% from the previous week. These pending sales are still down significantly year-over-year, but the plunge seems to have stopped and begun to reverse itself after April 15. It's important to note that pending home sales do not always close as completed transactions, but they can provide an early signal of future sales.

Pending sales were running roughly 18% above 2019 levels through March 11, when they began to fall as health and safety measures intended to counter the coronavirus pandemic took effect. By March 22, pending had fallen below 2019 levels, ultimately declining as much as 38.5% from a year ago by April 14. But they also began to subsequently rebound, and by the end of the week ending April 19 were 32.3% below last year's level.

It is far too early to say if this week's bounce in pending sales represents the start of a home sales recovery. But it shows that the deterioration is no longer getting worse — at least for now. The possibility of a double-dip or W-shaped recovery, in which the situation improves for a time before worsening again, cannot be entirely dismissed at this point.

Among large metros, pending sales have fallen the most compared to a year ago in Pittsburgh (-74.4%), Detroit (-66.8%) and Los Angeles (-58.7%). They have fallen the least in Cleveland (-16.8%) and San Diego (-22.5%).

Prices Stable, Overall Inventory at Record Lows

Overall inventory — 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. This shows that even despite shrinking purchase activity, there is not yet any buildup of unsold inventory; on the contrary, the pullback by would-be sellers has been enough to actually continue shrinking the supply of homes available to buy. This is in stark contrast to the housing market in 2005-2006, when a growing glut of unsold homes eventually caused price growth to stall out.

The typical home value in the U.S. rose 4.1% year-over-year in March to $248,857, according to the Zillow Home Value Index. Values rose the most in Phoenix (7.6%), Columbus (6.1%) and Charlotte (5.9%). Even if the late-March coronavirus-related slowdown in housing activity extends to prices, it's currently too soon to see it in the ZHVI.

The median list price of homes on Zillow is almost exactly where it was last year, up just 0.4% compared to April 2019, to $316,203. Unlike the ZHVI, median list price can be distorted when the balance of active listings shifts between higher-end and lower-end homes or otherwise changes in composition. However, list prices can be reported more quickly, so we are giving them a closer look during this time of rapid change.

The post Early Data Point to Slight Housing Turnaround After Initial Coronavirus Pullback (March 2020 Market Report) appeared first on Zillow Research.