Redfin: Housing Market Shows Signs of Rebounding from Coronavirus Shutdowns

Redfin, Seattle, said the housing market showed some early signs of recovery in May as inventory of homes for sale and contracts to buy homes both increased dramatically from April levels.

The report said the market remains overall very competitive thanks to a continuing shortage of homes for sale. U.S. home-sale prices increased just 0.5% year over year in May to a median of $299,400 across the 217 metros Redfin tracks, the smallest annual increase since home prices bottomed out in February 2012. However, the fact that this increase was so much smaller than the 4.7% gain in April was largely due to fewer homes being sold in the most expensive metro areas.

Overall home sales in May fell 30.8% from a year ago, but the most expensive metro areas all saw more dramatic decreases in home sales than the national drop. The 12 metro areas with median prices above $450,000 (seven in California) all saw home sales decline between 38% and 58% from a year earlier. San Francisco and San Jose, which both have median prices above $1 million, each saw home sales drop more than 55%.

“Although the housing market was still mostly stalled in May, it’s worth noting that homes under contract to be sold jumped 33% between April and May after two consecutive months of decline,” said Redfin lead economist Taylor Marr. “This is a key leading indicator for home sales in June and July. New listings of homes for sale have also likely passed their bottom, but are still about 20% below February’s level, so there’s still a ways to go before the housing market has recouped the lost activity of the past few months during the shutdowns.”

Redfin reported home sales fell 11.7% nationwide from April on a seasonally adjusted basis. The national count of active listings of homes for sale fell 21.2% year over year in May, just shy of the April decline, which was the largest on record. This is the ninth straight month of declines. The 0.5% increase in the nationwide number of homes for sale between April and May represents a gain of fewer than 9,000 homes for sale during the month. None of the 85 largest metros tracked by Redfin posted a year-over-year increase in the count of seasonally-adjusted active listings of homes for sale.

The number of new listings fell 21.5% compared with a year earlier, but surged 35.6% from the all-time low seen in April. This is a good sign that some balance may be returning to the market after the past few months of declining homes for sale and increasing  homebuyer demand led to intense competition and bidding wars in some places.

Marr said an even more encouraging sign is the bounceback in the number of newly constructed homes listed for sale in May, which was down half as much as the overall market—just 9.9% from a year earlier.

Homes that sold in May spent 37 days on market, unchanged from the same month a year earlier. The share of homes that sold above list price decreased just slightly, falling 0.6 percentage points year over year in May to 25.2%.