Existing-home sales across the U.S. dropped in April, continuing a two-month skid in sales brought on by the coronavirus pandemic, the National Association of Realtors reports.
Total sales of existing homes dropped 17.8% from March to a seasonally-adjusted annual rate of 4.33 million in April. Sales decreased 17.2% compared to March 2019 (5.23 million).
“The economic lockdowns have temporarily disrupted home sales,” says Lawrence Yun, NAR’s chief economist. “But the listings that are on the market are still attracting buyers and boosting home prices.”
April’s sales of existing home are the lowest since July 2010 (3.45 million) and the largest month-over-month drop since July 2010 (-22.5%).
The median price of existing homes for all housing types in April was $286,800, an increase of 7.4% from April 2019 ($267,000), with prices increasing in every region. April’s national price increase marks 98 consecutive months of year-over-year gains.
Home prices in the Chattanooga area have increased from $186,500 in July 2018 to $216,00 in April 2020, for 22 months of rising prices, the local MLS reports.
Yun says record-low mortgage rates will be the key factor driving housing demand as state economies steadily reopen.
“Still, more listings and increased home construction will be needed to tame price growth,” he adds.
Brandi Pearl Thompson, president of Greater Chattanooga Realtors, says low mortgage rates could fuel sales in the remote areas of Hamilton County.
“Mortgage rates allow buyers to buy more house,” Thompson explains. “However, that typically comes with higher property taxes, which in turn lower the amount a buyer can buy. This can fuel growth outside the city and great opportunities in the county that might not have been there before.”
Housing inventory
Nationally, total housing inventory at the end of April totaled 1.47 million units, down 1.3% from March, and down 19.7% from one year ago (1.83 million). Unsold inventory sits at a 4.1-month supply at the current sales pace, up from 3.4-months in March and down from the 4.2-month figure recorded in April 2019.
Thompson says housing inventory in the Chattanooga area has reached a historic low, going from a 3.8-month supply in November 2018 to the current 2.4-month supply. While this has frustrated buyers, it’s an indication of a strong seller’s market, she adds.
“It’s no longer rare for homes to receive multiple offers. It’s actually become the standard. If a home is priced right, it will sell,” Thompson says. “One difference between this bump and the recession 10 years ago, is 10 years ago, levels of inventory were over 11 months, and in some ZIP codes over 24 months. We now have more eligible homeowners, but we have not kept up with the pace needed for new construction and we do not have the inventory.”
Days on market
Nationally, properties typically remained on the market for 27 days in April, down from 29 days in March but up from 24 days in April 2019, the NAR reports. Fifty-six percent of homes sold in April 2020 were on the market for less than a month.
Locally, January and February had slight increases in days on market from 57 to 61 and then the traditional decrease to 50 with the onset of the spring market. This represents a 2% decrease year-over-year, Thompson says.
Distressed sales
Nationally, distressed sales represented 3% of sales in April, which was about even with both March 2020 and April 2019, the NAR reports.
Locally, distressed sales for the last 12 months have represented 3.3% of transactions. This number jumped to 3.8% in April 2020, when Realtors closed 812 units, 31 of which were distressed sales.
Single-family, condo/co-op
Nationally, single-family home sales sat at a seasonally-adjusted annual rate of 3.94 million in April, down 16.9% from 4.74 million in March, and down 15.5% from one year ago. The median existing single-family home price was $288,700 in April, up 7.3% from April 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 390,000 units in April, down 26.4% from March and down 31.6% from a year ago. The median existing condo price was $267,200 in April, an increase of 7.1% from a year ago.
“There appears to be a shift in preference for single-family homes over condominium dwellings,” Yun says. “This trend could be long-lasting as remote work and larger housing needs will become widely prevalent even after we emerge from this pandemic.”
Thompson says the single-family market is strong in the Chattanooga region. “The outlying areas are seeing an uptick in searches and requests for land and farms,” she says. “We’re getting more inquiries from out of state from people living in major metros looking to move to the small metro of Chattanooga. With more and more companies allowing employees to work remotely permanently, the influx of buyers will mostly likely continue.”
“While virtually every sector of the American economy has been hit hard by this pandemic, our nation’s 1.4 million Realtors have continued to show an undying commitment to their profession, their clients and America’s real estate industry,” says NAR President Vince Malta.
“As we find during any time of crisis, we have a tremendous opportunity to evolve and emerge stronger and more efficient. Having renewed our focus on new, innovative ways to serve American consumers, I’m confident the real estate sector and our nation’s Realtors are uniquely positioned to lead America’s economic recovery.”
Sources: National Association of Realtors; Great Chattanooga Association of Realtors