New residential listings decline sharply even as spring buying season begins
During the first week of April, newly listed homes nationwide were down 27.1% year-over-year. This time of year usually sees large increases from March to April as prospective home sellers ready their properties for the market. The coronavirus pandemic, however, has slowed listings during this otherwise busy time as they decreased 19% month-over-month. Nevertheless, people still in the market are adapting to social distancing restrictions by using 3D home tours, which are up over 400% since before the pandemic.
Overall, or active, listings are also down but to a lesser degree as they fell 8.3% Y/Y as of April 5.
Markets were poised for yet another busy and competitive home buying season at the beginning of March. But as concerns over the spread of COVID-19 led to shelter-in-place requirements, cold water was essentially thrown on the fire, cooling down sales activity but not eliminating it entirely. The good news for residential markets is that demand for housing never goes to zero. Families will continue to outgrow their current house, market conditions aside. While the overall job market is down dramatically, some people are still going through with relocation plans, work-related or otherwise.
While existing home sales suffer from the pandemic and resulting quarantine, rural land sales are likely to benefit as people want to get away from the crowd. Similar to existing home sale trends, the rural land market had solid fundamentals coming into the pandemic. Also, current low interest rate incentive investment, and low gas prices make a country get-away even more enticing.
In Alabama, the residential market has seen tight inventory conditions (properties listed for sale) for quite some time. At the statewide level, there have been 60 consecutive months of year-over-year declines in listings, with the last gain in February 2015. Double digit declines are the new normal, and statewide listings were down 13.9% Y/Y in February 2020.
In March, Alabama’s largest residential market, the Birmingham-Hoover MSA, posted a 10.5% decline in listings from one year ago. Total listings are also down in Baldwin County, falling 10.6% from March 2019. Lee County was the only metro area in the state to post a year-over-year inventory gain in February, and expect the supply side of the market to tighten even more due to the pandemic.