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Redfin: Home-Buying Demand Strengthens Despite Stricter Lending Standards, Inventory Shortages
Redfin, Seattle, said home-buying demand shook off more than five million new claims for unemployment assistance and continued to strengthen last week.
For the seven days ended on Sunday, April 19, home-buying demand was down 19% on a seasonally adjusted basis from pre-coronavirus levels after dropping as much as 34% at the beginning of April.
Despite the improvement, Redfin said, many sellers continue to sit on the sidelines, if they can afford to wait. In an April survey of 216 prospective sellers, Redfin found only one in five thought it was a good time to sell, down from one in two at the beginning of March.
“So it’s no surprise that new listings for the seven days ended April 17 are down almost 50% compared to the same time last year, far more than the 19% decline in buyer demand,” Redfin said.
The lack of inventory is one of the leading causes for a lack of sales, along with tighter lending standards and buyer concerns over the economy. Pending sales for the same period are down almost 50% compared to the same time last year.
With inventory down so much, prices have been “remarkably resilient,” Redfin said. Median listing prices for the seven days ending April 19 rose to $307,000, up 3% compared to the same time last year. That gain is inflated due to the Easter holiday timing in 2019,
The report also noted despite low mortgage rates, loans are harder to get. “Increased lending standards and concerns over job security, even for folks who are still employed, will limit opportunities for first-time and lower-income buyers,” the report said. “This threatens to deepen the divide between folks who can take advantage of historically low interest rates and those who can’t save up a 20% down payment or haven’t established their credit.”
The report can be accessed at http://www.redfin.com/blog/housing-market-improving-covid-19-unemployment.