The U.S. housing market began to show signs of slowing in the second half of March as the year-over-year decline in inventory softened, the number of newly listed properties declined and prices decelerated compared to earlier in the month, according to realtor.com’s March Housing Trends Report released today.
The monthly report provides the first data-based glimpse into the impact the COVID-19 pandemic could have on residential real estate as the market enters the spring home-buying season.
Due to the strong start to the month, the total number of homes for sale in March overall declined 15.7 percent from the same time a year ago, a faster rate of decline compared to the 15.3 percent drop in February.
This amounts to 191,000 fewer homes for sale year-over-year.
The impact of COVID-19 materialized in the latter half of March. While the last full week of February showed inventory declining by 16.8 percent — the largest year-over-year decrease since April 2015, the weeks ending March 21 and 28, respectively, declined at a slower pace of 15.2 percent each on a year-over-year basis.
“Our inventory and listing data can provide some early insight into how housing markets may be impacted by COVID-19, but the situation and reactions to it are still rapidly evolving,” said realtor.com® Chief Economist Danielle Hale.
“The U.S. housing market had a good start to the year. Despite still-limited homes for sale, buyers were buying and builders were building. The pandemic and virus-fighting measures appear to be disrupting that initial momentum as both buyers and sellers adopt a more cautious posture.”
Although there is not enough movement in weekly data to provide insight into shifts in days on market, the progression of weekly data hints that sellers may be rethinking or postponing their plans to list their home for sale in response to COVID-19.
In the weeks ending March 21 and March 28, the volume of newly listed properties decreased by 13.1 percent and 34.0 percent, respectively compared to the prior year. This is in line with recent surveys of agents and consumers that report declining interest among potential homebuyers and homesellers.
While far from foreshadowing price declines, price growth decelerated during the weeks ending March 21 and March 28 as compared to earlier in the first two weeks of the month.
During the last two weeks of March, the median U.S. listing price increased by 3.3 percent and 2.5 percent year-over-year respectively, the slowest pace of growth this year, and the slowest since realtor.com began tracking in 2013.
Inventory declines continued to impact the housing market in March. The metros which saw the largest declines in inventory were Phoenix-Mesa-Scottsdale, Ariz. (-42.2 percent); Milwaukee-Waukesha-West Allis, Wis. (-36.2 percent); and San Diego-Carlsbad, Calif. (-33.4%). Only Minneapolis-St. Paul-Bloomington, Minn.-Wis. (+3.6 percent) saw inventory increase over the year.
Consistent with the first two months of 2020, March saw homes selling more quickly than last year as an early home buying season began in the U.S. The typical home sold in 60 days, four days faster than last year. Properties in Miami-Fort Lauderdale-West Palm Beach, Fla.; Pittsburgh and St. Louis, Mo.-Ill.; spent the most time on the market, selling in 86, 78 and 65 days, respectively. Meanwhile, properties in San Jose-Sunnyvale-Santa Clara, Calif.; Denver-Aurora-Lakewood, Colo.; and Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va., sold most quickly, spending 24, 26 and 29 days on the market, respectively.
Listing prices grew at a slightly decelerating pace of 3.8 percent compared to February’s 3.9 percent. Of the 50 largest metros, 45 continued to see year-over-year gains in median listing prices. Pittsburgh (+17.9 percent); Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. (+14.0 percent); and Memphis, Tenn.-Miss.-Ark. (+12.7 percent) posted the highest year-over-year median list price growth in March. The steepest price declines were seen in Dallas-Fort Worth-Arlington, Texas (-2.7 percent); Minneapolis-St. Paul-Bloomington, Minn.-Wis. (-1.4 percent); ; and Houston-The Woodlands-Sugarland, Texas (-1.4 percent).