In late June, Zillow published a market research report detailing the sudden fall and subsequent rise of the 2020 U.S. housing market.
2019 Market Trends
The real estate market in 2019 built up momentum that many analysts expected to carry through into 2020. Homes nationally were listed for shorter periods of time than in 2018, and they sold more quickly in general. In late 2019, the market rose consistently in terms of year-over-year sales and speed to sale.
Early 2020 Home Sales
Before the pandemic, real estate markets in the U.S. were shaping up for strong sales in early spring. January and February, months which tend to have low overall sales, matched normal trends, but listings began to ramp up in preparation for spring. In early March, a month which typically begins the home shopping season, home sales were faster than those in the same week of March 2019 by 5 days.
However, predictions for spring 2020 markets were disrupted by the Coronavirus pandemic and the steps taken by the U.S. government in response. Conditions became immediately unfavorable in housing markets throughout the nation.
Home Sales Impacted by the Pandemic
Disruptions to the housing market lasted generally between March 2020 and early June 2020. This is normally the time when housing begins to sell more quickly as temperatures rise and buyers start shopping.
Activity in the housing market dropped substantially as lockdowns, social distancing, and other measures were put into place around the country. Although the market slowed, home sales did not stop entirely. In mid-May, sales took an average of 6 days longer than in 2019. Since that point, home sales have increased as both buyers and sellers are adapting to new market conditions.
Generally speaking, sellers pulled out of the market more consistently than buyers. Because of market uncertainty, sellers were more reluctant to put their homes on the market, resulting in tighter inventory nationally. Demand also dropped, but it happened at a slower rate. Home prices remained fairly consistent because of the simultaneous contracting of inventory with the reduced demand.
Local Trends Vary from National Trends
National home sale trends in the U.S. do not give a complete picture of what markets are like in much of the country. While 29 of the largest 35 metros in the country are showing faster home sale times (moving from active listing to under contract), the other 6 metros showed signs of slower sales.
Miami is a notable example. In mid-June 2020, home sales took an average of 55 days. During the same period in 2019, the average was 49 days. New York is a more extreme example. In mid-June 2020, the median days to sell a home was 70 days, whereas the median was only 47 days for the same period in 2019.
Continuing Market Projections
It’s unclear how the market will react through the remainder of 2020. Conditions improved considerably through late May and early June, accelerating rapidly to outdo the speed of home sales year-over-year from 2019.
As June continues, more sellers are putting their homes on the market while demand increases. Both buyers and sellers are increasing their interaction with the marketplace. As 2020 continues, housing markets in the U.S. are likely to continue improving from the slump.
Uncertainty may prevent markets from returning to pre-pandemic predictions. However, record low mortgage interest rates could provide a push toward relative stability, as buyers who did not make a purchase earlier in the year seek to buy a home throughout the second half of 2020.
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