The Housing Headline
There are 10 percent fewer homes for sale as compared to last year.
The News Behind The Housing Headline
The National Association of REALTORS® (NAR) reports that sales of existing homes rose to 5.77 million on an adjusted, annualized basis in February 2020.
The figure marks the highest annualized reading for Existing Home Sales since 2007.
Additionally, the NAR report shows the number of homes for sale nationwide down 10 percent from a year ago to 1.47 million – an average of 30,000 per state.
Homes sold after an average 36 days on the market in February and home supply now sits at 3.1 months, which means that every home for sale nationwide would be sold in 13 weeks.
Home supply below six months suggests that buyers have little negotiation leverage over sellers.
Why This Housing News Matters To You
When the U.S. housing market closed in February, high demand for homes, a scarcity of supply, and low mortgage interest rates combined to lift home sales to a 13-year high.
Nationwide, 47% of homes sold in less than a month in February. Many homes sold within days.
Then, COVID-19 hit and sparked a recession, which makes February’s data somewhat irrelevant to today’s active buyers of homes.
It doesn’t mean that home prices will drop, though.
Remember that in the months before the Great Recession of 2008-2009, mortgage lending was loose, and there were large numbers of homes for sale. By comparison, the last two years of housing have been characterized by responsible mortgage lending practices and not enough homes for sale.
Supply was almost three times higher in 2008 as compared to today. That’s a different market dynamic.
Because of COVID-19, we can expect fewer buyers buying homes, and also fewer sellers selling homes. The forces the led home prices down in 2008-2009 aren’t present in the market today.
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Home buyers snatched up properties for sale in May as housing made its v-shaped recovery.