Hello and thanks for joining us for another weekly market update, where we use MLS data to track the impact of COVID on the residential housing market. Last week, we noted that we’ve reached a new high for the year in terms of showings. Showing activity always quiets down during the Memorial Day weekend, and the recent events in Minneapolis may have capped any gains. Today we have something a little new and different: we’ve updated our showings chart to display 2019 activity for comparison. It’s noteworthy that showings began to slow at this time in 2019 as well, so the declines this year shouldn’t be too alarming. The recent unrest in Minneapolis doesn’t yet seem to be causing a major divergence in showing activity compared to 2019 levels.
The share of overall showing activity within each price range didn’t change dramatically from the prior week. We saw declines in the share of showing activity occurring in all price ranges under $300K. Despite the declines, those segments continued to make up the vast majority of overall showing activity. By contrast, the luxury segments gained market share.
When looking at the change in showing activity from the previous week to the most recent week ended 5/29, the only two segments to show gains in showings were $500-600K and $600-800K. The largest decline in showing activity was for homes priced between $400-500K. Overall, showings were down 12.3 percent from the week prior (not uncommon given the 2019 trend and holiday weekend).
Our first high-level look at seller activity comes by way of our weekly report. Here we can see how new listings activity has changed over time, especially since the declines that began in March. The recovery in new listing activity can be seen until the week ended 5/9. Seller activity nearly returned to pre-COVID-19 levels from the week ended 3/7.
Our detailed comparison of new listing activity over the last four years may be more instructive. The first trend to note is how close sellers came to reaching those March highs. The second trend to note is how the recent 2020 pattern mimics that of the prior three years. The challenge here is whether sellers (and builders) will be able to inject adequate supply into the market to satisfy motivated buyers.
This next pending sales trend confirms just how motivated buyers are. Note that buyer activity has been relentless and hasn’t declined since bottoming out during the week ended 4/18. Rock-bottom mortgage rates combined with a less competitive and less congested marketplace are enticing factors for buyers who are able to work or work from home.
Our comparison of pending sales over the last four years confirms the growth in activity. It was around 5/14 when our buyer activity trend surpassed its previous peak and posted new highs for the year so far. Here again it’s evident that declines in signed contracts near the end of May is quite commonplace, at least for the four years shown. It’s also noteworthy that this year’s pending sales trendline has converged with those of recent years.
Our last two trends show the change in new listings and pending sales by week for last year compared to this year. Most price segments showed declines in new listing activity, except for $500-750K and and $1M+. The declines were most dramatic on the affordable end of the spectrum—particularly for homes under $120K. As discussed previously, this is a very thin segment that doesn’t see much inventory replacement. The over $1M range suffers from the same small sample size constraints but showed the largest gain. This can be from a limited number of additional listings or caused by a suppressed baseline period.
The pending sales trend for the recent week compared to the same week last year was somewhat similar yet also unique. On the buyer side, the gains were concentrated mostly between $350-500K and to a lesser extent the $500-750K bracket. In sharp contrast to seller activity (above), we see buyers of $1M+ properties pulling back nearly 40.0 percent. The affordable segments also witnessed declines in contract activity. Overall there were 10.7 percent fewer signed purchase agreements compared to the same week last year.
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, June 4, 2020 (2:00 PM to 3:00 PM). Registration is required.