According to George Raitu, senior economist with Realtor.com, economic headlines for the week ending May 29, 2020, were somewhat mixed. While GDP was revised downward for the first quarter of 2020, consumer confidence rose in May due to many states slowly reopening business activity. Also, unemployment insurance claims continue to be elevated, but they are trending downwards in recent weeks.
Looking back on the impact of the pandemic Raitu said in his report for the week ending May 29 that the impact to residential sales activity is significant as contract signings were down 22% month-over-month (M/M) and 34% year-over-year (Y/Y). New listings continued to trend downwards as they dropped 20% Y/Y for the week ending May 23, suggesting that potential sellers are reluctant to put their home on the market and that the pandemic has impacted sellers as much or more so than buyers.
Residential markets nationwide and in Alabama faced inventory shortages for several years before the pandemic, and one of the more notable outcomes thus far is the effect on residential listings. As many potential buyers are reluctant to list their home for sale given the current social and economic conditions, inventory has tightened further as a result. Home sales prices, however, have been propped up somewhat by limited inventory. The median sales price increased 13.9% Y/Y in Alabama and 7.5% nationwide. Mainly due to softening demand, Realtor.com recently revised their expectations for the second half of 2020, calling for a slight drop in median sales price (-1%) by the end of the year.
Market conditions where sellers have more bargaining power are still common in many areas, with months of supply nationwide (inventory to sales ratio) dropping from 4.2 in April 2019 to 4.1 in April 2020, while in Alabama it declined from 3.7 to 3.4. The following metro areas had fewer than 3 listings per sales in April: Decatur 1.6, Huntsville 1.8, Athens 2.0, Mobile 2.1, and Tuscaloosa 2.9.
The pandemic has caused the sales cycle to lengthen somewhat in recent months as homes are also selling an average of 16 days slower than one year ago. Markets in Alabama went against this trend in April, with properties selling an average of 4 days faster than April 2019.
One positive note for housing are the relatively low rates for well-qualified buyers on a 30-year fixed mortgage. Rates continue to reach new lows, providing a favorable financing environment that has the potential to sustain demand to some degree in the months ahead.
May Data Preview Phenix City Area
Total Sales: 121 (-4%)
Median Sales Price: $193,000 (8.8%)
Average DOM: 49 days in May 2020 versus 96 in May 2019
Total Listed for Sale: 283 (-28.9%)
Inventory to Sales Ratio: 2.3 in May 2020 versus 3.2