Housing’s resiliency against the pandemic is “remarkable,” NAR Chief Economist Lawrence Yun said to REALTORS® attending a virtual conference.
A third of REALTORS® say they’re busier now than a year ago, but inventory is drastically lower.
The market is on the upswing of a “V-shaped recovery,” with sales about 10% higher annually.
Builders are ramping up construction to satisfy intensifying buyer interest—but it may not be enough
The housing market has been defying forecasts during the COVID-19 pandemic. Initially, home sales nose-dived for three consecutive months during state shutdowns. But by June, a “remarkable housing recovery” took hold, and real estate bounced back with a vengeance, Lawrence Yun, chief economist for the National Association of REALTORS®, said Wednesday during NAR’s virtual 2020 Leadership Summit.
One-third of REALTORS® say they’re busier this summer than they were a year ago, according to a recent NAR survey. It’s a sign that even under the weight of compounding national crises—the pandemic, skyrocketing unemployment, racial inequality, and a recession—the housing market is likely to remain strong. The market is on the upswing of a “V-shaped recovery,” Yun said, with sales about 10% higher than a year ago. Yun made other observations about how the housing market is faring.
Housing Shortages Limit Sales Recovery
Inventory is 20% lower than a year ago, but buyer interest remains high, Yun said. New-home construction could alleviate shortages, but activity has fallen under historic averages for the past decade, he added. Some areas of the country saw construction halted during the initial stages of the coronavirus pandemic.
But builders are starting to make up for that lost time. Housing starts for single-family and multifamily construction jumped nearly 23% last month, the Commerce Department reported Tuesday. With limited housing supply, “there is intense buyer competition in the market,” Yun said, noting that the Western region of the U.S. is seeing the worst inventory shortages in the nation.
The Pipeline of Buyers Is Growing
Meanwhile, mortgage applications, an early gauge of homebuying activity, are up 27% compared to a year ago, the Mortgage Bankers Association reported Wednesday. “These reflect buyers who are in the pipeline and are about to hit the market,” Yun said. Contract signings also have surpassed year-ago levels, up 6.3% in June compared to the previous year, according to NAR’s Pending Home Sales Index. Record low mortgage rates—which have dipped below 3% for the first time ever—may be a motivating factor. They could go as low as 2.89% in the next month or two, Yun said.
A Great Suburban Rush—Again?
While migration trends were toward urban centers before the pandemic, real estate thought leaders have predicted a suburban resurgence as home buyers seek more space for social distancing. Now the data is supporting that theory. Coronavirus and work-from-home flexibility is sparking the trend reversal, Yun said. More first-time home buyers and minorities have also been looking to the suburbs for affordability, he added.