National Housing Market Recovery Trends
Making up for the lost spring home buying season, the housing market continues to heat up this summer. For the first time since the pandemic began, all four major components of housing activity are growing above the January pace. The realtor.com Housing Market Recovery Index reached 105.6 nationwide for the week ending August 8, posting a 1.9 point increase over last week and 5.6 points above the pre-COVID baseline. Crucially, this week’s move takes the new supply growth past the recovery threshold for the first time since March, with the supply component reaching 101.7 nationwide.
After seeing other measures of growth recover over the past few months, the final piece of the housing recovery puzzle appears to have fallen into place. Growth in housing demand, asking prices, and the pace of sales had all crossed the recovery boundary in sequence, but new listings remained the missing link. Effectively, it’s taken nearly five months for sellers to make a full return into the housing market.
Seller confidence had been improving gradually after reaching the bottom in mid April, and now it appears to have reached an important milestone. While encouraging, the improvement to new listing growth is only the first step of many needed to solving inventory woes for buyers. More new properties for sale is a good sign for home shoppers, but so is the price mix of the homes entering the market. Price gains are visibly outpacing pre-COVID levels despite pandemic and economic fears.
Much uncertainty remains in back-to-school plans, lockdowns and the overall employment situation. The broad move above recovery was much needed for housing. Importantly, it will need to hold and improve through the end of the year to make up for the spring season disruptions. The next few weeks going into the fall are key in assessing the extent to which the market can recover lost ground.