The coronavirus pandemic all but halted U.S. home sales during widespread lockdowns, but new metrics confirm that home sales is making a comeback.
The housing market likely hit bottom in mid-April and is poised to have a shortened but strong sales season this summer, with new listings and rising prices, according to Realtor.com’s new May monthly housing trends report.
“There are a lot of indicators showing that the summer is going to be a good period for the housing market. I think we’re going to see some of the buying that would have happened in the spring shift into the summer,” Realtor.com Chief Economist Danielle Hale told Yahoo Finance.
Home sellers are re-listing their homes. Inventory was down 44.1% in April and 29.4% in May, compared to the same months last year — but it was only down 20% for the last week of May.
“That’s definitely an improvement, a sign that we’re moving in the right direction. We’ve still got some ground to cover to get back to a more normal spring and summer housing market, but we’re moving in the right direction,” said Hale.
Home prices are higher than ever, hitting a median listing price high of $330,000 in May. After only a 0.6% annual price growth in April, the slowest pace in three years, home prices rose 1.6% in May year-over-year. And in the last week of May, prices rose 3.1% from the same time last year.
Of the nation’s top 50 cities, 35 posted price growth in May. Prices rose the most in Los Angeles, Pittsburgh and Cincinnati. And economists expect listing prices to rise even higher this summer.
“We’re starting to see prices come back… and they strengthened throughout the month of May… So it’s definitely good news for owners and sellers in the market,” said Hale.
Still, homes are selling at a slower rate, as sellers re-enter the market. Homes sold in 71 days on average in May, compared to 58 days on average at the same time last year and 62 days in April.
“The process is taking longer. So as a buyer, you should be prepared for maybe a bit more extra time into the process, especially on the financing side. And as a seller, it might take buyers a little bit longer to find you, and then once you find your buyer, it might take a little bit longer to get to the closing table as people have adapted to working from home to combat the coronavirus,” said Hale.
Northeast and Midwest cities were hit harder by the pandemic than Southern cities: Inventory declines were worst in Philadelphia, Providence, R.I. and Baltimore, and prices actually declined in Detroit, San Antonio, Texas, and Seattle. The slowest sales activity was in Buffalo, N.Y., Pittsburgh, and Detroit.
“Where COVID cases have been highest, we do see the biggest impact as far as sellers not bringing their homes to market… [But] as the COVID cases improve, the sellers come back to the market. Nationwide we’re seeing that, and I expect to see that in those markets that are hardest hit as well,” said Hale.
Though the summer months are looking bright, sales may dip in the fall if a second wave of the pandemic hit America’s economy, Hale warned.
“The fall is a little bit more of an open question… Buyers and sellers tend to take a pause when the overall economy shuts down. They choose to stay home as well. And that means we see a slowdown in housing activity, even though it’s not necessarily regulated as such,” said Hale.
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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