Hello again and thanks for joining us this week to track the impact of COVID on the residential housing market. We recently passed an important milestone where showing activity reached a new high for the year. Prospective buyers took a quick breather during the cold Mother’s Day weekend and more recently during the Memorial Day weekend. Showing activity is still one of the most reliable leading indicators of future demand, suggesting further gains in pending and closed sales down the (trend)line.
As we’ve seen week after week, both the level of and change in showing activity often varies dramatically by price point. Most recently, there’s been a gain in showings on homes priced between $200-250K. Homes in that segment accounted for roughly one in five showings in the last week. There was a slight down-tick in the share of overall showings occurring on properties priced under $200K (a thin and competitive segment) and for listings priced between $250-300K—a segment that made up another 20.0 percent of showings. More broadly, there were gains in showing activity for three of the four price ranges above $500K, suggesting some stabilization in the luxury brackets.
Speaking of the (sometimes volatile) luxury brackets, the largest week-to-week increase in showing activity was on homes priced at or above $1M. The largest decline in showings was on properties priced between $800K-1M. As we’ve noted, though, these brackets often have limited activity that causes extreme swings. Another notable gain was for homes priced between $500-600K.
After a recovery from the slow-down that nearly brought seller activity back to pre-COVID levels, we’ve had a bit of a pull-back since. Some of that could result from rainy weather and Mother’s Day. Even so, the current level of new listing activity is above the trough spanning from 3/28 to 5/2.
The slight slow-down in seller activity is better visualized on our new listing trend that compares the last four years. It’s important to note that previous years also show a pull-back as we approach month-end. So perhaps we shouldn’t read too much into that prematurely. It has to do with a significant share of new listings coming online at the beginning of the month.
Digging even deeper into new listings by price range, we can once again see the trend of increases in listings for homes over $1M but declines on listings between $750K-1M.
Our pending sales trend confirms that buyer activity has recovered more quickly and more so than seller activity coming out of the declines in March and April. Notice how close the 2020 trendline in blue is to the 2019 trendline in grey. The gains in buyer activity (as measured by signed purchase agreements) have been more consistent as well. This dynamic of consistent gains in buyer activity combined with a mixed pattern of seller activity could further pressure inventory levels in an already under-supplied market.
This next visual showing pending sales over the last four years further demonstrates the recovery in buyer activity. Over the next few week it’s possible that buyer activity gets back on track with the previous three years. Record low mortgage rates are helping, but mostly for buyers who can work from home and who are on solid financial footing.
Looking now at the week-to-week change in pending sales by price range, the $750K-1M range showed the strongest gain. Homes priced under $350K had fewer accepted purchase agreements than the previous week, but not by much. Overall, there were 4.4 percent more pending sales. Sometimes weekly trends can be volatile and are affected by a wide variety of factors. Besides, buyer activity under $250K had already been on the decline pre-COVID, due to a lack of inventory and extremely tight market in those competitive price points.
Today we also want to say thank you to all of those who have bravely served, including our front-line healthcare workers, grocery clerks, delivery drivers and other essential workers.
Thanks for reading and be sure to tune in next week.
Join MAR’s Director of Research and Economics, David Arbit, for a free weekly 1 hour presentation and discussion around the impact of COVID-19 on the Twin Cities real estate market Thursday, May 28, 2020 (2:00 PM to 3:00 PM). Registration is required.