Coronavirus sent the U.S. housing market for a spin this summer as demand outstripped supply—and the highly competitive environment appears to have continued into the fall.
“Normally, this last week of September is sort of a buyers’ sweet spot,”
, chief economist at Realtor.com, told Barron’s. In a typical year, September is when buyer demand decreases as home listings remain on the market, resulting in more options and less competition, she said.
But that was not the case this year. Homes spent an average of 54 days on the market nationally in September, 12 fewer days than the same month last year and three fewer than in August 2020, according to a Realtor.com study. That’s an unusual occurrence during a month when market activity normally begins to slow. This was the first year since at least 2016 when homes spent less time on the market in September than in August, the report says.
“In many ways, the housing market is behaving almost as if it’s still summer,” Hale said. Even as homes flew off the market, prices continued to increase—the median national home listing price grew 11.1% from the previous September—while supply remained depressed, with 39% fewer homes for sale than the year prior.
There are a few factors at play, Hale said—one being the delayed start to this year’s buying season. The arrival of the novel coronavirus initially froze the normally busy spring real estate market, with buyer activity rebounding and then some in late spring through the summer. Historically low mortgage rates also play a part in continued buyer competition, Hale says, as could the absence of seasonal hallmarks denoting the end of the season, like children returning to school and employees returning from summer vacations. Low levels of homes for sale also compounds buyer competition.
While the Realtor report may not be welcome news for prospective buyers hunting for the house of their dreams, Hale says now could be the best time for some buyers, depending on their priorities. “If you are a buyer shopping for a home, it kind of depends on what factors you’re trying to optimize,” she says.
Buyers looking for options may have more luck if they wait into early 2021, says the economist, who expects that listings will increase as the traditional homebuying season approaches in February and March. While this fall season is “not as much of a relief as it usually is,” buyers concerned with rising home prices may want to move sooner, she says, adding that prices typically pick up between mid-January and early February. “Even though we’re seeing price increases now, they may not necessarily slow down that much in the future,” Hale says.
The report isn’t the only indication of ongoing buyer interest. The National Association of Realtor’s index measuring pending home sales hit a high in August, while the most recent report from the Mortgage Bankers Association, which issues weekly releases on the volume of applications for a loan to purchase a home, reported levels 22% greater than the same week in 2019.
“If you look at purchase applications, those typically start to slow down in September, and we haven’t really seen any sign of that, at least not significantly,” says Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting. “There’s still, I think, some evidence that we’re going to see some of this continue later into the fourth quarter.”
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