Single-family home (SFH) prices are continuing to surge despite the overall U.S. economy reeling from the negative effects of the COVID-19 pandemic. In addition to historically low mortgage rates, one of the primary drivers of soaring home prices is dramatic declines in available home inventory over the past year.
The nationwide SFH inventory has trended downward for several years, a decline that has been more dramatic thus far in 2020, as buyers respond to the impacts from the pandemic.
Collateral Analytics, a Black Knight data and analytics company, analyzed SFH inventory for numerous, major U.S. counties dating back to 2007. The researched counties cover a geographically diverse section of the nation’s real estate markets and offer a holistic view of the long-term, falling inventory trends.
Each of the spotlighted counties is experiencing its lowest SFH inventory level in several years — some seeing their lowest levels since before the Great Recession of 2008.
These trends are visible at the micro level by leveraging the Collateral Analytics Daily Home Price Flash, which uses “number of new listings” as one of its many market indicators.
First, we can see the year-over-year SFH new listings decline for San Diego, which experienced modest upward trends during the first half of 2020, but still considerably below the same time period in 2019. With spring behind us and summer nearing an end — the real estate market’s most active time period — new listing trends have begun to dip once again.
Similar impacts can be seen in Las Vegas, which saw sharp SFH new listing declines at the pandemic’s onset in March and April. While the area saw moderate recovery during late spring/early summer, new listing levels continue to struggle year-over-year as the anticipated downturn during the fall and winter months begins to take place.
Home inventory is expected to remain low as homeowners leave denser, more urban areas for larger properties — primarily in suburban environments — that provide more neighborhood space, back yards and home offices, as remote working becomes more prevalent.
Black Knight’s Collateral Analytics will provide bimonthly snapshots of home sales and price information for major U.S. markets via this blog.