The pace of home sales reached new records in February

THE PACE OF HOME SALES REACHED NEW RECORDS IN FEBRUARY COVID-19 IS LIKELY TO BRING CHALLENGES TO BOTH BUYERS AND SELLERS

In February, before the onset of the severe Covid-19 crisis, the housing market was operating at a record pace. Sellers were continuing to gain more leverage while buyers were benefitting from the low mortgage rates. According to Realtors.com estimates for the speed of the market in February, supply reached 3.3% in combination of the 50 largest markets. Realtor.com arrive at the estimates by determining the ratio of the active listings to closings of home sales. The February pace was, however, recorded as the highest compared to the previous years.

The estimates by realtor.com indicated a 0.3% rise in supply over January and a 15.6% drop when compared to February 2019. According to experts, a decrease in a month’s supply figures represents a fast and more seller-friendly housing market as it shows that there are more homes listed for sale as compared to the current rate of home buying.

On the other hand, the February month’s drop in supply was an early indication that there would be an occurrence of a future decline in the housing market. This means that housing market experts were already aware of the coming deceleration even before the onset of the Covid-19 pandemic. Another indicator for the future slowdown in the housing market was the drop in supply rate in percentage as compared to the previous year’s February percentage. The 15.6% in months’ supply in February was significantly lower than the 22.6% in January and a 21.3% drop in

December last year. The decrease in the month’s supply is said to have been recorded since October 2019.

As the Covid-19 crisis set in, the housing market stalled, presenting a particular challenge to both the home buyer and sellers. Since the onset of coronavirus, home buyers and sellers have found it so challenging to track the housing market to obtain the necessary information before making any transaction. Currently, each party (that is the buyers and sellers) is responding differently to the situation brought by Covid-19, which features dynamic shifts of both the buyers’ and the sellers’ markets.

On the seller’s side, the rates of listings getting in the market have dramatically dropped. The drop in listing rates has resulted in a decline in inventory added to the national pool of listings. On the other hand, social distancing measures have led to a very low number of closed sales in the housing market. The drop in the rate of new listings has contributed to the small amount of listing inventory, which in turn resulted in a low number of closed sales recorded during these times of crisis.

However, everything that has an alpha must also have an omega. The Covid-19 pandemic is going to be no more in a matter of time. Once this is over, the economic activities are expected to be back fully operational, and the housing market will be expected to reset back and pick up from where it left. According to experts, once these times have passed, listings and home sales will be most likely to shoot up in different phases.

There will be a large inventory as the listings will be accumulating, and this will result in a significant rise in the numbers of a months’ supply. This upward trending of the rate of a months’ supply will, in return, result in a temporary shifting of the housing market to a buyer’s market. The rate of home buyers will gradually catch up with the accumulating listings, and they will eventually balance out. Interesting, right?

Works Cited;

https://www.realtor.com/research/the-pace-of-home-sales-reached-newrecords-in-february-but-covid-19-likely-to-bring-challenges-to-both-buyersand-sellers-in-the-near-term/.