After an extremely hot sales summer, home sales cooled significantly in September. Pending home sales, which reflect contracts that were signed during the month, dropped 2.2 percent from August to September.
Putting that in context, however, is how September sales compared to 12 months earlier. Year-over-year, sales contract signings were up 20.5 percent from September 2019, showing just how active the market has been since the coronavirus (COVID-19) pandemic began.
"The demand for home buying remains super strong, even with a slight monthly pullback in September, and we're still likely to end the year with more homes sold overall in 2020 than in 2019," said Lawrence Yun, NAR's chief economist. "With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future."
Since May, the pandemic has largely shaped the housing market. Millions of apartment dwellers suddenly working from home began to look for single-family homes. Others sought homes in other cities, convinced they could continue to work remotely. NAR expects that trend to continue.
"Additionally, a second-order demand will steadily arise as homeowners who had not considered moving before the pandemic begin to enter the market," Yun said. "A number of these owners are contemplating moving into larger homes in less densely populated areas in light of new-found work-from-home flexibility."
Seattle, Boston, and Los Angeles lead
Realtor.com's Housing Market Recovery Index, which reveals metro areas where the market has recovered or even exceeded its previous January levels, showed the greatest recoveries as of October 10 were in Seattle-Tacoma-Bellevue, Wash.; Boston-Cambridge-Newton, Mass.-N.H.; Los Angeles-Long Beach-Anaheim, Calif.; Las Vegas-Henderson-Paradise, Nev.; and San Jose-Sunnyvale-Santa Clara, Calif.
A report this week from online real estate marketplace Zillow showed how the pandemic has distorted the housing market. Uncertainty, likely caused by COVID-19, is keeping more than a third of would-be sellers out of the market. Financial anxiety is a big part of that, the Zillow survey found.
The result is fewer homes for sale, which could be one reason for September’s drop in new sales. Thirty-one percent of current homeowners point to financial worries as a reason to stay in their current home, with 27 percent saying they recently suffered a loss in household income. While they might find ready buyers for their home, they worry about qualifying for a mortgage to purchase a new one.