Mid-Year Market Update - Positive Signs for Real Estate

With all that 2020 has thrown at us, it is hard to believe that we are already nearly halfway through the year. As states begin to reopen in a corona-virus world, and people begin to feel somewhat safer to return to "normal," the housing market is changing too.

Of course, the pandemic has greatly affected the housing buying market as states quarantined in April, and according to the National Association of Realtors' (NAR) Pending Home Sales Index, contract signings fell 21 percent in April. This will likely lead to a significant decrease to closed sales in May, said Lawrence Yun, NAR's Chief Economist.

However, experts are seeing some positive trends, and have a more positive outlook for the summer. Forbes reported that Realtor.com's weekly housing report has several highlights for the market including only a 20 percent decrease in new listings May 23, as opposed to a 28 percent decrease the week prior. Median listing prices have also "regained momentum" and growth is reaching pre-COVID levels.

In addition to these positive indicators, the number of mortgage applications have also increased, according to the NAR. This will likely come at no surprise given the shockingly low mortgage rates. Freddie Mac reported that the average 30-year fixed-rate mortgage for the week of May 29 was 3.15% - the lowest in their records for 50 years. Rates for a 15-year fixed-rate mortgage also fell, averaging 2.62% last week.

"These unprecedented rates have certainly made an impact, as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8 percent increase of last week - a remarkable turnaround given the sharp contraction in economic activity," Freddie Mac's chief economist Sam Khater told the NAR.

Finally, buyer activity is also giving hope for the a rebound in the market. Redfin data, reported by Forbes, shows that buyer demand is leading to more bidding wars where inventory is limited. According to the report, 41 percent of homes received multiple offers from late April to May, as opposed to just 15 percent of homes at the same time last year. "In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about home buying in the midst of social distancing measures," Lawrence Yun said.

While this summer season may look different in terms of vacations and social gatherings, signs are pointing to a still bustling summer real estate market!