It is not a secret that the pandemic that started in February has slowed down the real estate market greatly if not stopped it at all. Brokers could close only those deals that were already made and it was almost impossible to find new clients. However, the first conversations about quarantine weakening became the initial point for the restoration of sales and rentals. And the biggest surprise was made by a sudden increase in new home sales that happened in May already. Despite the fact that the numbers of homes sold did not reach the 12.7% received in the previous year, there was still a good step forward that can be an indicator of the real estate market revival.
What has changed?
According to the governmental report, the sales of newly constructed homes have increased in May significantly. There was a growth of 16.6% in comparison with April and the number of homes sold has reached 676,000. This number is even higher than the data predicted by professional polls and surveys.
It is worth remembering that the government might make late revisions in similar reports. The original number announced about April was 623,000, but later it was decreased to the figure of 580,000. The May report seems to be more realistic because more people have understood that pandemic is not an obstacle.
If to analyze the number of homes purchased by regions, the highest increase was in the Northeast - almost 50% of all properties. Western states could face an increase of 29%, while Southern states got 15.2% more new homeowners. The median price for a single-family house across the US is around $317,000.
If to compare this data with selling existing homes, the last ones could face only a drop in sales which is very disappointing. At the same time, this data can be so different because the reports are made at different stages of the property-buying process. The statistics about new homes is compiled on signing a contract with a building company, while the sales of existing property are considered completed when the deal is closed (it may take several months for that). It means that you can observe the latest tendency in new-home sales and the decrease in the sales of existing homes reflects the situation of March-April.
What does it mean for buyers and real estate agents?
The difference of 1-2 months in providing information about sales of new and existing homes and the latest increase in the number of contracts signed say about the revival of the real estate market. Neither restrictions to move across the state nor possible job losses did not influence people’s purchasing possibilities drastically. It is clear that many potential buyers and sellers have taken a pause to see how the state economy will cope with the struggle and how this war reflects on it. The recent surge says that clients begin to come back to the market and do that quite actively.
The increase is good news for home builders as well. Many of them have experienced a shortage of material supply and a drop in sales, but now the situation is changing. What is more interesting, buyers’ preferences have also changed and now many people look for homes in rural areas further from the hustle and bustle of metropolitan areas.
Many experts say that a surge in new home sales should be followed by the growth of sales in the existing homes market (it may take up to a month to see the changes). But if these predictions do happen, it is possible to state that the real estate industry has come out of the decay and moves forward confidently.