Mending from the sudden sharp drop in activity due to the coronavirus crisis, real estate across the United States is heating up, rekindled by growing demand and insufficient supply.
The National Association of Realtors’ (NAR) pending home sales index, a future-looking indicator of completed sales based on signed contracts, posted a staggering comeback in May, the latest month for which data is available. The index spiked 44.3 percent, registering the highest month-over-month increase since its inception in 2001.
First-time home buyers Stuyve Pierrepont and his wife said they have seen this shift occur almost overnight.
The Pierreponts, who work in Washington, D.C., and previously rented in Northern Virginia, renewed their 18-month home search in early 2020. Prior to the viral outbreak, the couple looked at roughly a dozen homes. During the pandemic, they only saw four residences in person. But the couple wasn’t ready for the speed with which fellow home shoppers were scooping those houses off the market.
“It’s a seller’s market,” said Pierrepont, a finance professional who runs a blog about leading an environmentally conscious lifestyle. “We were back and forth on whether timing was right to buy a home, given everything that’s happening. The big surprise was that the markets we were considering didn’t slow down at all.”
The couple toured a house in Annapolis, Md., for example, which went under contract later the same day. “There were a couple of times when we saw places we really wanted, and they sold before we could act,” Pierrepont said. “We were really discouraged by that fact.”
Their real estate agent, Shane Hall of the Shane Hall Group, newly associated with Compass and formerly with TTR Sotheby’s, said in late June that Annapolis, which lies less than an hour east of the District of Columbia, had a single month of supply, meaning that if no new listings were to come on the market, all existing stock would be purchased in 30 days.
“That’s incredibly rare,” Hall said. “We just don’t have a ton of inventory. And we have a lot of demand.”
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With the country’s economy tentatively reopening and shelter-in-place restrictions easing, housing experts forecast that home sales will rise through the summer. The biggest constraint is the number of listings, which are returning to the market only gingerly compared to the appetite for them.
The latter is in part whetted by historically low mortgage rates that are now hovering around 3 percent, nearly 2 percentage points below their level about a mere 18 months ago and where they are expected to remain this year. Annualized new mortgage applications have trended up for weeks.
“Today’s low mortgage rates are a true game changer,” said Ali Wolf, chief economist at Meyers Research, a new-home data and consulting firm. “As the economy reopens, it comes down to four words: Fear of missing out.”