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New Home Sellers Join the Market as High Demand Persists, According to Zillow

The familiar drumbeat of high buyer demand and rising prices kept its rhythm into September…

  • September 28, 2020

The familiar drumbeat of high buyer demand and rising prices kept its rhythm into September as buyers scooped houses off the market at record rates, according to online real estate company Zillow’s Weekly Market Report.

Although total housing inventory continues to tighten, sellers are feeling more comfortable listing their homes, with more new listings coming on the market than at any point since the beginning of the pandemic.

Optimism is rising in both the housing market and in the economy as buyers, sellers and economists gain confidence, new data show.

Houses still going under contract quickly in extended buying season

Newly pending sales are up 25.5% compared to the same week last year, the highest year-over-year increase in the weekly Zillow database reaching back through 2019.

That figure is down 0.7% since last month but up 0.7% compared to last week, at a time when sales volume typically falls. In the same week last year, newly pending sales fell 9.3% month over month and 5% versus the week prior.

Together it’s more evidence that demand for houses is still strong and that the buying season has been pushed back after a delayed start in the spring.

Typical days-to-pending for houses on the market remained a lightning-fast 13 days for the fifth week in a row. This is 14 days faster than last year and the shortest time on market going back through 2019.

New sellers join the marketplace amidst strong sales 

Total for-sale inventory continues a long run of tightening, down 29% compared to 2019. Total inventory is down 3% since last month and has fallen week-over-week for the last 14 weeks.

New for-sale inventory, on the other hand, is up 16.2% month over month and rose 17.6% since just last week, though it is still down 3.5% year over year.

New for-sale inventory is at its highest level since March 22, following yearly trends of increasing new listings to start September and suggesting that more homeowners are deciding that now is a good time to sell.

Robust demand drives prices higher

The median sale price from the week ending July 25 was $281,844, which is 7.8% higher than last year and the highest yearly rise in prices going back through January 2019. It’s up 4.5% month over month.

Median list price is $345,824, up 9.3% year over year — the highest year-over-year increase going back through January 2019. However, median list prices are up only 0.2% month over month and saw no change from the week before.

The share of listings with a price cut is 4.2%, down 1.3 percentage points from last year and 0.1 percentage points from last month. The median price cut is 2.5%.

Optimism rises in the housing market and economy

The Fannie Mae Home Purchase Sentiment Index increased 3.3 points in August, recovering from a slight dip in July.

Five of the six components of the index rose month over month, showing rising optimism among buyers and sellers. The national survey of consumers showed that 59% of respondents said they thought August was a good time to buy a house, up from 53% in July and a yearly low of 48% in April.

The U.S. economy is recovering from the pandemic-related downturn faster than expected, said economists polled by the Wall Street Journal, although an expected rebound in growth in the third and fourth quarters is not likely to make up for ground lost in the second quarter, when GDP shrank at a 31.7% annual rate.

Employment is still hurting, however, as first-time jobless claims totaled 884,000 last week, which is unchanged from the week prior and worse than the expected 850,000.

Continuing claims from those receiving at least two weeks of unemployment rose to 13.385 million.