While the COVID-19 pandemic gripped the nation and brought everyday life to a near halt, the housing market remained as robust as ever this past year, with home prices rising 14.3%, new listings coming in at 27% lower, with 50% fewer homes on the market, while homes are selling nearly a week faster than last year.
Realtor.com’s Housing Market Recovery Index, a measure of the pandemic's impact on the housing market through an analysis of new listings, buyer demand, time spent on the market and home prices, stood at 101.6 for the week ending March 6, 0.5 points higher than the previous week, and 1.6 points above pre-pandemic levels.
After stalling at the onset of the pandemic, listing prices posted double-digit price growth for the past 30 weeks. The gap between supply and demand was notable before the pandemic. However, one calendar year after the World Health Organization (WHO) declared the coronavirus a global pandemic, stay-in-place orders forced many out into the suburbs, seeking homes with greater square footage and areas to accommodate remote work situations. These events only worsened the market's existing supply to demand imbalance.
"The housing market's lopsided momentum could ease in the coming months," said realtor.com Chief Economist Danielle Hale. "We expect the vaccine's rollout to alleviate some sellers' anxieties, which could help the supply crunch. At the same time, although interest rates remain low, they've begun to increase, which could test buyer demand in the coming months."
New listings were 27% lower than they were during the week that ended March 7, 2020. Following an uptick at the end of 2020, the first few months of 2021 have been marked by large and consistent declines in new listings. New listings traditionally increase in March and April, and the expectation is they will grow again this year, especially compared to last year when the disruptions to seller activity were largest. The lack of listings in January and February 2021, due to severe winter storms across the nation, created a gap of approximately 200,000 homes in new listings, making it necessary for new listings to come on to the market for healthy sales activity this spring.
Total active inventory continues to decline, dropping 51% year-over-year in the week ended March 6. With buyers active in the market despite, or perhaps because of, the uptick in mortgage rates, homes are selling quickly—six days faster on average than a year earlier—and the total number actively available for sale at any point in time continues to decline.