The Mortgage Bankers Association (“MBA”), which tracks mortgage applications and purchases, reported yesterday that its index for single-family homes rose for the fifth consecutive week. On Tuesday Fed Chairman Jerome Powell testified before the Senate Banking Committee. He gave a pretty grim assessment of the state of the US economy. The mortgage market was the bright spot. Since mid-March, the Fed has purchased more than half a trillion dollars of Mortgage Backed Securities (“MBS”). It has pushed interest rates for home loans to the lowest rates ever recorded, getting close to under 3% for a 30-year loan. Also, during a 60 Minutes interview this past Sunday, Powell said “I think it’s a reasonable expectation that there’ll be growth in the second half of the year”.
In my most recent commentary on May 10th, I stated with a fair degree of certitude that home sales for Sarasota County were trending higher and prices stable within a 4% range. Contrary to public perception, based upon a comparison of pending home sales (single family, condos and villas) for the first 20 days of this month compared to May 1 – 20, 2019, I am calling this a Seller’s Market. Home sales are close to outpacing the same time last year. The housing market will lead the economic recovery.
- Total homes for sale down 22.3%.
- Purchase contracts (pending sales) are exceeding new listings. New listings are down 24.5%, while pending sales are down only 1.8%. There is a shortage of homes for sale.
- 25% of all purchase contracts were new listings, i.e., homes listed in the past 20 days. It speaks volumes to buyer appetite, scrambling for homes. Example, last week I listed a home for sale. Within the first 3 days there were 19 showings. We received 3 Offers. It went under contract over list price.
- Average days on the market (list to contract) down 23.3% to 66 days. If your home is languishing on the market, it is priced too high.
- Median sold price up 0.7%, $284,000. Average sold price down 3.1%, $380,000. Average list price up 4.1%, $716,000.
- Months of inventory based on pending sales down 16%, a 3.1-month supply, fostering price stability notwithstanding a fractured economy.
The supply of homes for sale is declining more dramatically than homebuyer demand. Notwithstanding the depths of the slowdown from the coronavirus shutdown, with great speed and alacrity home sales have recovered. Based on the first 20 days of this month, homes are going under contract faster and negotiations are more competitive than it was last year at this time. After the initial 30-day shock of the coronavirus pandemic, I see no evidence that the COVID-19 crisis is adversely affecting home sales.