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Real Estate Big Data

Home sales dive 10% in May – when is a sales rebound expected?

(REAL ESTATE) Home sales plummet in May, which we all expected, but when will sales begin to recover in light of this pandemic?

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As you would expect, May marks the third consecutive month of home sales declines amidst a global pandemic. According to the National Association of Realtors (NAR), existing home sales fell 9.7% in May compared to April, down a whopping 26.6% compared to this time last year.

The silver lining is that values continue to improve, with a median existing home price of $284,600 nationally, up 2.3% from May 2019, marking the 99th month of year-over-year gains.

Inventory levels rose 6.2% from April, and are down 18.8% from May 2019. Average days on market didn’t move much, at 26 days being equal to May 2019, and down from 27 days in April.

“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” said Dr. Lawrence Yun, NAR’s chief economist.

He added, “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

Sales also reflected an uptick in suburban sales over urban home sales. Dr. Yun cited work from home demands, however, anecdotally we would add some people moving away from densely populated areas in response to recent unrest.

What will ease housing conditions?

As he has observed repeatedly in recent years, Dr. Yun points to home builders. “New home construction needs to robustly ramp up in order to meet rising housing demand. Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”

Mortgage Banker’s Association’s (MBA’s) SVP and Chief Economist, Dr. Mike Fratantoni’s insight pointed to inventory challenges as well: “As buyers are returning to the market, as evidenced by the strong, nine-week rebound in MBA’s purchase application data, the lack of homes for sale will be a real constraint. Although demand certainly dropped in March and April due to the crisis, supply dropped even more, and has thus far kept home prices from declining. We expect that home-price growth will pick up over the summer due to insufficient supply levels.”

Dr. Fratantoni noted, “The market is supported by strong demand from first-time homebuyers, who represented 34% of home purchases in May. Millennial-driven demand will be a tailwind for the market for the next several years.”

“Although the real estate industry faced some very challenging circumstances over the last several months, we’re seeing signs of improvement and growth, and I’m hopeful the worst is behind us,” said NAR President Vince Malta, broker at Malta & Co., Inc.

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Real Estate Big Data

Demand for urban vs. suburban housing remains even (unless you’re in SF)

(REAL ESTATE BIG DATA) Most would assume that housing market trends would show people moving out of cities and into the suburbs following COVID restrictions. But the demand for both has stayed surprisingly even.

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Houses part of the housing market against a blue sky.

Despite what most people think, the suburban housing market isn’t completely leaving the urban market behind in the dust. According to a 2020 Zillow Urban-Suburban Market Report, data shows both markets are “hot sellers.” To illustrate this trend, Zillow’s Economic Research team analyzed various points related to for-sale listings.

Data shows homes in both areas are selling quicker than they were at the beginning of the year. The trend of houses selling above their listed prices and home value growth has accelerated at about the same pace for both markets.

With the exception of the Northeast region, national year-over-year (YoY) pending sales trends are almost even across urban classifications since February. Due to a smaller urban inventory pool at the start of the pandemic, this might account for the slower acceleration rates of sales in the Northeastern states.

On Zillow, suburban homes are receiving about the same attention as they did in 2019, and “urban and rural page views each climbed 0.2 percentage points from last year.” Suburb listings do attract more traffic on Zillow, but urban listings are still holding their ground.

Based on home characteristics, there isn’t a higher demand for single-family homes versus condos. Overall, this means the urban market is still attracting an audience.

However, this isn’t true in all cases. The San Francisco metro area falls out of these patterns. A great increase of listings are just sitting on the market. With an inventory up 96% YoY, this is a significant jump compared to the surrounding suburbs. Sellers are flooding the market, but buyers haven’t changed their purchasing pace.

According to Bay Area Market Reports, “With the increase in inventory has come a big jump in the number of listings reducing asking price. In some market segments, sellers are now competing for buyers, instead of buyers competing for listings.”

Although “San Francisco list prices have fallen 4.9% YoY,” there aren’t enough people buying in that housing market. With more tech companies like Google and Facebook allowing employees to work remote, hundreds of employees are leaving the city. And with them, will renters and buyers that aren’t renewing their leases look elsewhere to settle down?

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Real Estate Big Data

Top 30 ‘work from home’ counties in U.S. ranked (Texas beat all y’all, btw)

(REAL ESTATE) NAR examines the shift in purchase decisions based on a rapidly changing workforce to work from home, and of course, Texas dominates the top 30. Maybe not the top 10, but the top 30.

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We typically ignore all of the new, rushed rankings of geographies during the COVID-times, but the National Association of Realtors (NAR) just put out a well thought out argument for their top 30 counties for working from home, taking into account internet connectivity, the percentage of workers in office-related jobs, home affordability, urbanization, and a county’s population growth.

Not to be a conspiracy theorist, but the top 10 looks like a map of the old Big 12 football conference schedule back when it was the Southwest Conference, just saying…

The report analyzes the aforementioned factors that “support the remote work trend,” which we firmly believe will drive real estate purchases for years to come as employers begin implementing more permanent flex work options.

Texas leads all states with 7 counties among the top 30, but for the sake of fairness, here is the top 10, in which we painfully acknowledge Georgia as the top spot stealer:

  1. Forsyth County, Georgia
  2. Douglas County, Colorado
  3. Los Alamos County, New Mexico
  4. Collin County, Texas
  5. Loudoun County, Virginia
  6. Hamilton County, Indiana
  7. Williamson County, Tennessee
  8. Delaware County, Ohio
  9. Broomfield County, Colorado
  10. Dallas County, Iowa

“The coronavirus pandemic greatly accelerated the number of workers who are able to work from home,” notes NAR Chief Economist, Dr. Lawrence Yun. “Possibly a quarter of the labor force may be permitted to work from anywhere outside of the office even after a vaccine is discovered – compared to only 5% prior to the pandemic – and this will greatly change the landscape of where people buy homes.”

NAR President Vince Malta observes that location options are not the only changes for potential homebuyers, but that as remote work becomes more commonplace, “we may see buyers seek larger properties that offer space for a potential home office and other features that have become more valuable as a result of this pandemic.” Aha!

Malta adds, “The growing trend and historically-low mortgage rates are spurring potential homebuyers to consider a broader range of options and rethink what’s important to them in the long term.”

In a statement, NAR indicates, “The growing number of people working remotely also impacts commercial real estate, particularly the office sector, with future office sizes and locations potentially changing as a result.”

Dr. Yun states that the future of commercial real estate “appears uncertain” as companies reorganize “from having a central business district headquarters to several suburban satellite offices.”

The bright spot, however, is retail. “One can reasonably expect to see some growth in the number of smaller stores in the top 30 counties coming at the expense of similar establishments near downtown office buildings,” Dr. Yun concluded.


Below is a breakdown of their methodology:
nar work from home

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Real Estate Big Data

Home purchase contract signings surge 5.9% in July

[REAL ESTATE BIG DATA] Positive NAR reports encourage strong homebuyer return into the housing market following pent-up demand.

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pending home sales contract signings

Like all other housing economic indicators, home purchase contract signings jumped 5.9% in July, according to the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI).

This marks the third consecutive month of growth, and all regions saw rising pending home sales during this time in annual and monthly improvements. Comparing the data to this time last year, contract signings are up 15.5%.

The index is used by the industry as an early indicator of upcoming closings. What do consumers do with this data? Typically not much.

But with all of the positive headlines, homebuyer Alexei F. in Austin, TX tells us that his family is inspired to begin house shopping a year earlier than previously planned.

“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market,” said NAR’s Chief Economist, Dr. Lawrence Yun. “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”

The global pandemic restricted the spring buying season, but NAR points out that most states are at least partially reopened, freeing up the pent-up demand.

Dr. Yun said in a statement that there are “no indications that contract activity will wane in the immediate future, particularly in the suburbs.”

Further, he forecasts that existing home sales (closings) will jump to 5.8 million in the second half of this year, creating a rebound and a small (1.1%) gain over 2019. In 2021, he anticipates that with a continuing low interest rate environment, and an economy he expects to expand by 4%, sales could reach 5.86 million.

“Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Dr. Yun said.

“If 20% more homes were on the market, we would have 20% more sales, because demand is that high,” Dr. Yun observed, adding that he expects housing starts to average at 1.35 million in 2020 and to pick up in 2021, to 1.43 million.

July saw small to large surges regionally, and all have substantial growth compared to July of 2019:

  • The Northeast PHSI grew 25.2% to 112.3 in July, a 20.6% jump from a year ago.
  • In the Midwest, the index rose 3.3% to 114.6 last month, up 15.4% from July 2019.
  • Pending home sales in the South increased 0.9% to an index of 142.0 in July, up 14.9% from July 2019.
  • The index in the West rose 6.8% in July to 106.4, up 13.2% from a year ago.

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