Home Sales Exceed Pre-Pandemic Levels for the First Time; Sentiment Grows for Buying Homes Sight-Unseen

Redfin, Seattle, said home sales surpassed pre-pandemic levels for the first time the week ending July 5, up 2% on a seasonally adjusted basis compared to January and February levels.

A separate report by Zillow, Seattle, noted a growing number of home buyers and sellers say they are more likely to make the purchase or sale of their biggest financial asset entirely online

Redfin said the housing market continued its recovery in the week ending July 5 despite the rise in COVID-19 cases. Demand is being propelled primarily by record low mortgage rates; the average 30-year fixed rate was down to 3.03% for the week ending July 9.

“The industry is responding to an avalanche of applications for refinances and purchases,” said Rob Foos, a mortgage advisor with Redfin Mortgage in Boston. “A combination of rock-bottom rates plus pent-up purchase demand has resulted in the highest levels of purchase applications in about a decade.”

Redfin said new listings were at their pre-pandemic levels for three straight weeks, up 1% on average on a seasonally adjusted basis. But there aren’t enough new listings to satisfy the strong homebuying demand. As a result, the total number of homes for sale was down 29% from a year ago. Redfin agents report that sellers are now rarely citing coronavirus concerns as a reason not to list, but more often cite the lack of homes for sale itself as the thing that’s holding them back.

“Some of my clients are considering selling, but it’s a matter of finding a home they can buy,” said Redfin agent Thomas Wiederstein in Phoenix. “Even if they do find a home that checks all the boxes, many move-up buyers can’t buy a new home before they sell their current one. With bidding wars so common, it’s very hard to get an offer accepted that’s contingent on the sale of the buyer’s current home.”

Buyers face competition more often than not, as more than half of Redfin offers faced a bidding war in June for the second month in a row, and homes are going off-market quickly. The share of listings that went off market within two weeks stood at 45% this week, up from 35% a year ago.

Redfin San Francisco agent Chad Eng describes a housing market that feels “chaotic” in the absence of pre-pandemic norms.

“Due to COVID-19, agents are scheduling back-to-back 15-minute in-person home tours instead of holding traditional open houses. If you miss your appointment, you’re out of luck. Sellers often set a deadline for buyers to submit offers so they can review all of their options at once, but now that there’s so much uncertainty, sellers who receive one strong offer are less willing to wait around to see what else trickles in. I’ve seen multiple sellers accept an offer before the deadline, meaning buyers who wait miss out on their shot at buying the home.”

Redfin said with competition come rising home prices. The average sale price for the week ending July 5 was $310,000, up 7% from a year ago. Asking prices for newly listed homes continue to accelerate as well, rising 16% over the same week last year to $324,900.

The report can be accessed at https://www.redfin.com/blog/home-sales-above-pre-coronavirus-levels/.

Meanwhile, a new Zillow survey reported 36 percent of Americans would be more likely to try to buy a home entirely online during the current coronavirus outbreak; 43 percent would be more likely to try to sell a home entirely online.

Zillow said digital tools widely adopted during the coronavirus pandemic are giving people the ability and the confidence to buy or sell a home in a tight real estate market where homes are selling at their fastest pace in two years. The survey said consumer demand will likely keep those tools in place and lead to more online real estate transactions in the future.

The survey reported more than a third of Americans (36%) say they are more likely to try to buy a home entirely online during the coronavirus pandemic, and 30 percent say after the current outbreak ends, they would do the same. Even more Americans appear to be getting comfortable with the idea of selling a home virtually. During the pandemic, 43 percent say they are more likely to try to sell a home entirely online. When the current outbreak ends, 33 percent anticipate they would still be more likely to try and sell a home entirely online. 

A majority of people still want to tour a home in person before committing their down payment. However, when asked to choose between taking an in-person or a virtual tour after the current outbreak has ended, one out of three say they would choose the virtual or video tour, which Zillow Economist Jeff Tucker said represented a “meaningful departure” from traditional shopping behavior.

“The home shopping tradition of loading the family into the minivan and touring open houses all weekend may be over,” Tucker said. “Now shoppers are realizing they can use virtual tours to either skip in-person shopping, or at least to winnow down their options and visit fewer homes in person, making it easier and less time-consuming to find their next home. That speed advantage can give buyers a leg up in today’s fast-moving market.”