This past week, Redfin’s homebuying demand moved out of recovery mode and into growth mode, reaching a new peak. For the seven days ended May 17, demand was 16.5% higher than it was before the pandemic, on a seasonally-adjusted basis, according to Redfin’s latest weekly report.
To handle the rapid rise in home-buying demand, Redfin has been bringing staff back from the furlough that was initiated in early April. Of the roughly 1,000 people who went on furlough, Redfin has already welcomed approximately 350 employees back to work.
New cases of coronavirus have certainly tapered from their peaks back in April, but over 20,000 new cases are still being reported daily in the U.S. and last week another 2.4 million workers filed for unemployment benefits. Homebuying demand seems to have been largely unaffected in the face of those headwinds.
Mortgage rates have stimulated the housing market, with the average 30-year fixed rate mortgage at record lows of 3%. Now a new report from the Federal Reserve sheds some light on how homebuying demand has strengthened despite unemployment rates that haven’t been seen since the Great Depression. Among respondents in the Fed’s survey, 13% reported a job loss or furlough in March or early April, but that number was 39% for people with a household income less than $40,000. With job losses disproportionately affecting people with lower incomes, unemployment hasn’t had much effect on homebuying demand, yet.
The great migration out of America’s major metropolitan areas is picking up steam
The big question is whether this demand surge will be a quick burst of buyers who deferred their plans during the shutdown or if it’ll last much longer as people hunt for more space and more affordable homes. Search data from Redfin.com suggests that migration from expensive metropolitan hubs to smaller cities and towns has been happening for years, but it seems to be gaining steam since the coronavirus outbreak.
Tiffany Aquino, a Redfin agent in Virginia, said, “The pandemic has people re-evaluating their lifestyle and their goals. People who were considering a move two or three years down the line are pulling the trigger now. I have one client who’s planning to retire early, cash in on high home prices in Virginia and move to South Carolina. Another client is selling her home here to move to Florida full-time to take care of her elderly father. People are putting family priorities first.”
More and more, buyers are using digital technology to see homes without having to be there in person. Over the past week, just over 1 in 4 new Redfin clients had their first home showing via video chat and video-chat tours led to 11% of the offers Redfin agents wrote in that same time.
Perhaps the biggest shift in viewing homes is the rising popularity of online 3D walkthroughs that let a buyer tour a home virtually anytime of day or night. For years, Redfin agents have been creating 3D walkthroughs for Redfin clients using Matterport technology. Now the popularity of these 3D scans is surging among other brokers, as well. Nine percent of all new listings that launched the week of May 10 included a Matterport scan and views of Matterport scans on Redfin.com have more than doubled in the last month.
Inventory of homes for sale has finally stabilized after hitting rock bottom in early May
The number of homes for sale is down 23% for the seven days ending May 15, compared to the same period the prior year. But the absolute count of homes for sale inched up each of those days.
Redfin agents across the country are saying the spring market is about to kick off after a two-and-a-half month delay. Some sellers have gotten more comfortable putting their homes on the market and agents have gotten more skilled at showing homes safely while social distancing. Other sellers worry that a second wave of the virus may shut down the economy again later this year and want to list now to take advantage of the strong demand right now.
Low inventory is constraining the number of home sales, but prices are rising
Whether it’s increasing comfort or rising concerns about the future, more sellers put their homes on the market in the seven days ending May 15 than any seven day period since March 25. Over the next few weeks, Redfin will see if new listings can keep up with buyer demand and if more inventory leads to an increase in home sales.
For the seven days ending May 15, the number of new pending sales was still down 29% compared to the same period the prior year. That’s an improvement from the 40% declines Redfin saw in mid-April when the market had all but ground to a halt, but still a far cry from normal.
In many markets, there aren’t enough homes for sale, so a lot of the homebuying demand is unmet. More than 45% of homes under contract in the seven days ended May 15 were on the market for less than two weeks; five percentage points higher than the same week of 2019.
As a result, prices are rising. The median listing price is up 6% for the seven days ended May 15, compared to the same period last year. Many buyers assumed prices would fall as the pandemic set in, but sellers seem to be holding firm. The increase in home prices and stories from Redfin agents suggest that sellers who don’t sell are more likely to take their home off the market and wait rather than accept a lower price. Some buyers are still out bargain shopping, but are finding there aren’t many deals to be had.
To view charts highlighting more housing data from this past week, please visit: https://www.redfin.com/blog/sellers-continue-jump-back-into-housing-market-demand-recover
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $115 billion.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email email@example.com.