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. Today we begin with an encouraging trend from our showings numbers. It’s clear that we are more or less back on-track with 2019 showing activity. Lately, it’s been toward the “more” side. The most recent data (below) illustrate that showings have just posted a new high for this year, while the 2019 trend had already reached its peak by early May. Depending on how long we remain above last year’s trend, it’s possible to make up some of the lost ground from March and April. Despite recent unrest and a pandemic, showing activity in the metro has rocketed to new highs and is higher than at any point in 2019. Current activity has also bucked last year’s trend of fewer showings heading into June.
Those gains in showing activity were widely-shared across the board. Every price bracket experienced an increase in showings from the week prior. Also note how the bulk of our activity occurs under $300K, no surprise given our median sales price is around $295K as well. That means half of our sales are above $295K and the other half occur below that threshold. But there were also gains in the luxury segments.
As we’ve noted in the past, even segments with increases in activity can sometimes lose market share if the growth isn’t as robust as in other segments. Even though the three segments under $300K all had gains in showings, they lost share to the other price brackets that had stronger growth.
Case in point is the week-to-week to change in showing activity. All price points saw increases. We saw modest but solid gains in the three most affordable brackets but larger gains in the over-$400K segments. For that reason, the three affordable segments lost market share while others gained. Showings between $400-500K rallied nearly 24.0 percent. It appears as though the mid-market and move-up ranges have continued to outperform other segments.
Diving further into our new listing trend, we can see that seller activity has settled into a pattern that mimics the trend from previous years but just a bit lower. That U- or V-shaped dip around the end of May and beginning of June is a common feature across all four years. It’s also encouraging to note that all four years also show slight down-trends moving into June. The fact that new listing activity in 2020 was quite strong pre-COVID hopefully bodes well for the rest of the year. It’s important to expand supply to meet the buyer demand spurred by low rates and other factors.
Next we will dive into the detailed pending sales trend. As a reminder, a pending sale is a signed contract or accepted purchase agreement on a property. The deal hasn’t closed yet, but the papers are signed and the listing has a high likelihood of closing. For this reason, pending sales are a great leading indicator of demand and closed sales. This year’s pending sales trendline has nearly synced back up with the previous three years. This buyer demand indicator is much closer to prior years than our sellers’ new listings trend. It will be interesting to see if the showings trend displayed above translates into stronger demand that could make up some of the lost ground.
These last two show weekly year-over-year change in seller and buyer activity. All price points showed fewer new listings compared to the same week in 2019. You will notice that the declines on the affordable end were more dramatic than the declines on the upper end. Part of that is to be expected as the most affordable properties get snatched off the market every year and those listings aren’t replenished. Also, as those listings (mostly) rise in value each year, some “age out” of one range and are swept into the next range up. Compared to last year, here we can see the second move-up and luxury ranges performing fairly well. Still, our best performer was that mid-market range for properties priced between $350-500K.
Contrary to sellers, buyers actually pushed pending sales higher in three price ranges. By a margin of 0.3 percentage points, our $350-500K mid-market range was the second best performer after $750K-1M. That still reinforces our theory about the middle price ranges performing the best. Luxury homes over $1M saw nearly 32.0 percent fewer accepted offers.
For this week’s “wild card chart,” we have a weekly view of the Distressed Sales Rate. This metric captures the percentage of sales that are either foreclosures or short sales. With everything happening in the market and economy (especially related to forbearances), this will be another indicator that is worth watching. Note that we always see heightened levels of distressed or lender-mediated sales in December and January.
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 18, 2020 (2:00 PM to 3:00 PM). Registration is required.