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 kick off with an encouraging trend from our showings numbers. Last week we pointed out that 2020 showings had reached a new high for the year. At this point in 2019, showing activity had already peaked by early May. It’s still possible to make up some of the lost ground from March and April, although making up all of the difference could be challenging. Despite several and varied headwinds, showing activity in the metro is higher than at any point in 2019.
The majority of those showings occurred on listings priced under $300K. Nearly 64.0 percent of showings last week were for affordable properties under that $300K threshold. Homes in the three top luxury brackets also made up a larger share of the showings pie. One interesting observation is that while half of our home sales occurred under $295K in May, 64.0 percent of the showings were below $300K. This further illustrates the shortage of affordable listings, which forces some buyers on the cusp into the next price range. It isn’t too far fetched to imagine a buyer looking in the $275-300K range to end up purchasing at $305K or $310K. Still, there is more demand than supply in the most affordable brackets.
The largest gain in showing activity from the prior to current week was for homes priced between $250-300K. Again, with a median sales price of $295K, that’s where we’d expect the bulk of our showings. We also saw declines in our two most affordable segments, but we’re seeing gains in some of our luxury segments as well. The second largest gain in showing activity was in the $800K-1M range. Overall, showings were down 0.5 percent from the prior week.
Next we’ll take a look at 2020 buyer and seller activity compared to the prior three years. Seller activity has recovered from the mid-April lows and has mirrored the trend from prior years—albeit about 50 units per day lower. Seller activity for this year has not reached new highs, new listings are still below their March highs. Since demand is quite strong, additional supply (both existing/resale homes as well as new construction) will be increasingly important to sustain a healthy marketplace.
Pending sales reached a critical and promising milestone just in the last few days. The current rolling weekly average of daily pending sales counts is now higher than any of the prior three years. Let us repeat that: this year’s pending sales have reached new highs for the year and are above 2017, 2018 and 2019 levels. After the March and April dip, buyer activity has come roaring back. The 2020 trend has closely mimicked the pattern from previous years, but this year’s trend has quietly floated above prior years. This bodes well for demand moving forward. The challenge, of course, remains adding and keeping enough supply to meet this growing demand.
Since it can be difficult to picture the relationship between seller and buyer activity, we’re also including the ratio of pending sales to new listings this week. A value of 93 means that there were 93 pending sales for every 100 new listings. A higher number indicates a closer balance between supply and demand, which means a tighter market. The prior three years had pending sales to new listings ratios around 75.0 percent. This year the ratio has reached 93.0 percent—a remarkably high number that confirms the fact that pending sales are ahead of the prior three years while new listings are well below the previous three years. The higher this ratio, the more downward pressure on already-low inventory, the more upward pressure on prices, the faster homes are likely to sell and the more likely the sellers’ market is to continue. That’s not to say this couldn’t change quickly, but for now, the balance between supply and demand remains tight and continues to favor sellers.
Our last two charts look at the change in new listings and pending sales by price range compared to the same week last year. New listings were down across the price continuum, more so at the affordable end and in most but not all luxury brackets.
Alternatively, four price ranges showed gains in pending sales for the week compared to last year. The largest gain in buyer activity was for homes priced between $750K-1M. But buyers also wrote more offers on homes between $250-350K. That segment showed a 20.1 percent decline in seller activity, again tightening up an already tight segment.
For this week’s “wild card chart” we’re showcasing some findings from the “Back to Normal Barometer.” The survey found that 83.0 percent of respondents were ready to tour a home listed for sale (not including an open house) while the other 17.0 percent were awaiting further assurances or a medical breakthrough. The same survey found that a slightly lesser 73.0 percent were ready to attend an open house, with the remaining 27.0 percent awaiting the same assurances.
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 25, 2020 (2:00 PM to 3:00 PM). Registration is required.