Photo: James Bombales
When stay-at-home orders were put in place in late March and early April, scores of homeowners across the country delisted their properties or delayed selling.
Last month, the supply of existing homes for sale plummeted 24 percent as economic uncertainty compelled Americans to stay put. This caused new construction homes to make up a larger share of properties on the market, approximately one in five, than at any other time since 2012.
According to a new report from real estate brokerage Redfin, the supply of new-construction homes experienced only a slight tumble in April, falling 10.5 percent year-over-year.
“Builders are running a business and focused on the bottom line, so they need to clear their inventory as quickly as possible at any given time, especially during an economic downturn,” said Redfin lead economist Taylor Marr.
“Homeowners, on the other hand, decide to move, list and sell when the time is right, for the right price, and sometimes even to the right buyer. For many homeowners, a pandemic is not the ideal time to move and have strangers come through their homes, so those who have the flexibility are putting off listing for now.”
Builders weren’t completely immune to the effects of the COVID-19 pandemic, however. New listings for new construction homes dropped 12 percent from March to April. New condo listings suffered the most, falling 29.5 percent month-over-month, while new single-family home listings recorded a marginal decline of 9.8 percent. By comparison, new listings for existing homes nosedived 36.3 percent over the previous month.
Sales were equal for new and existing homes, down 20 percent from the same time last year. The median sale price of a new home deflated 2.3 percent year-over-year to $359,000 last month as existing home prices increased 6.2 percent to $294,000.
Marr explains that this is because new homes are typically less affordable than their older counterparts. In an economic downturn, buyers gravitate toward lower-priced homes, or, if they do go the new construction route, they choose homes at the lower end of the market without all the bells and whistles.
Housing starts were down 30.2 percent last month as reported by the US Department of Commerce, but Property Economist Matthew Pointon of research firm Capital Economics believes the new construction single-family home market will bounce back as states begin to reopen. “We anticipate starts will average around 900,000 annualised in the fourth quarter of the year,” wrote Pointon in a response to the data.