A Look at the Market One Year Into COVID
Since the start of the pandemic home prices have risen 14.3%, new listings are 27% lower, there are 50% fewer homes on the market and homes are selling almost a week faster.
Although many people were forced to put activities on hold over the past year, buying a new home was not one of them. The U.S. housing market, buoyed by record low interest rates, remote work and Americans' desire for more space, outperformed much of the economy throughout 2020. Today, it remains more lopsided than ever as the gap between buyer demand and supply widens, according to a new report issued today by realtor.com® that examined COVID-19's impact on the U.S. housing market one year after the World Health Organization declared the virus a global pandemic.
The realtor.com® Housing Market Recovery Index, which was created to measure the pandemic's impact on the housing market by tracking movement in new listings, buyer demand, time on market and prices, stood at 101.6 for the week ended March 6. Aside from new listings, which remain below the pre-COVID baseline, the market is tracking ahead of pre-pandemic levels at the end of January 2020.
"The housing market bounced back so much faster than other sectors of the economy that many have forgotten that housing activity slowed to a crawl during the early days of the pandemic," said realtor.com® Chief Economist Danielle Hale. "One year later, the demand for housing remains strong, while supply remains limited."
However, Hale noted, there are reasons to believe a change may be on the horizon. "The housing market's lopsided momentum could ease in the coming months," she said, adding, "We expect the vaccine's rollout to alleviate some sellers' anxieties, which could help the supply crunch. At the same time, although interest rates remain low, they've begun to increase, which could test buyer demand in the coming months."
Realtor.com®'s recap of the pandemic's impact on the housing market is summarized below.
Median listing prices up 14.3% year-over-year
After stalling at the onset of the pandemic, listing prices have posted double-digit price growth for the past 30 weeks. The gap between supply and demand was sizable before the pandemic, and in a move that surprised many, the pandemic boosted buyer interest without a commensurate increase in seller activity, worsening the market's existing imbalance and driving to record highs.
New listings are a sliver of what they were
Nearly a year after the onset of the pandemic, new listings, which gauge seller activity, were 27% lower than they were during the week ended March 7, 2020. Following an uptick at the end of 2020, the first few months of 2021 have been marked by large and consistent declines in new listings. New listings traditionally increase in March and April, and the expectation is they will grow again this year, especially compared to last year when the disruptions to seller activity were largest. The lack of listings in January and February of this year has created a 200,000 gap in new listings, making it necessary for new listings to come on to the market for healthy sales activity this spring.
"The pandemic not only changed what people want in a home but also how they shop for one with more and more of the process taking place online," said realtor.com® CEO David Doctorow. "In an environment where the number of homes listed for sale is limited and affordability is becoming more of a concern for many, the competition to find the home of your dreams is greater than ever. With features like real-time alerts when new listings come onto the market, video tours that allow you to tour a home immediately and our mortgage calculator, realtor.com® is helping to give people the tools they need to make informed decisions."
There are 50% fewer homes available for sale now than a year ago
Total active inventory continues to decline, dropping 51% year-over-year in the week ended March 6. With buyers active in the market despite, or perhaps because of, the uptick in mortgage rates, homes are selling quickly and the total number actively available for sale at any point in time continues to decline.
There's no time "to think about it"
During the week ended March 6, homes sold six days faster on average than a year earlier. Buyers not only have fewer homes to choose from, they need to act fast to succeed.