The market picks up speed due to surge in buyers, but housing supply still tight
Home buying season kicked off to a booming start this summer as buyers flooded into the market despite the coronavirus pandemic.
Realtor.com recorded all-time high monthly traffic of 86 million unique users in June, breaking May's record of 85 million users. On June 25, the website's daily traffic also hit a peak of 7 million unique users.
"The consistent, record-level homebuyer interest we've detected on realtor.com over the last five weeks is setting up the tightest summer home-buying season on record," said Javier Vivas, director of economic research for realtor.com. "All-time low mortgage rates and easing job losses have boosted buyer confidence back to pre-pandemic levels."
The realtor.com Housing Market Recovery Index posted the biggest weekly gain yet, up 2.1 points to 97.8 nationwide for the week ending July 4. The increase brings the index only 2.2 points below the pre-pandemic benchmark. However, tight supply continues to slow down the recovery, according to the report. Total listings were still 31% lower than 2019 levels while new listings were down 4%.
More sellers will have to enter the market for sustained improvement in home sales during this summer, according to Vivas.
"With supply at record lows, the backlog of demand portends increased competition and a seller's market in the weeks ahead," he said. "While buyers are back, growth in home sales this summer will be constrained by the slow return of sellers and the limited amount of homes hitting the market."
On a regional level, the West led the recovery at 104.4. The Northeast is also now above the pre-COVID baseline last week at 102.1. The South and Midwest lagged at 96.4 and 95.4, respectively, but continued to bounce back. The most improved states in the overall recovery index were Boston, San Francisco, Denver, Philadelphia, and Los Angeles, with growth in demand and the pace of sales bypassing pre-coronavirus levels.
Other highlights of the report:
- Total inventory – The number of homes for sale plummeted 31% week over week even though new listings are improving. More home buyers are taking advantage of low mortgage rates and putting a dent in inventory.
- Median listing prices saw a 6.2% year-over-year increase, faster than the pre-COVID pace.
- Time on market accelerated and is now only three days slower than a year ago as the tight inventory forces buyers to make faster decisions than in the early pandemic period.
