- Home values increased +5.4% y/y in April up from +4.5% in March, according to CoreLogic
- Inventory of entry-level homes down -25% in April from last year
- CoreLogic predicting home values to be down -1.3% by April 2021
Home sales and home prices have gone in opposite directions during the COVID pandemic. Nationally, home values were up +5.4% y/y in April 2020, an increase from +4.5% in March 2020, according to CoreLogic. Home sales? Down -84% in New York, according to Urban Digs, approximately 28% on average nationally, according to the National Association of REALTORS® (NAR).
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How could this disparity between home sales and prices exist? In terms of sales, people simply stopped buying during the coronavirus pandemic. In terms of supply…which gets to the root of price…homeowners who had planned to be sellers decided to wait for more buying action before they listed their homes. And those who already were sellers decided to pull their listings off the market altogether in hopes of the market improving after the onslaught of the pandemic. The result? Limited/reduced supply equals higher or at least flat prices.
The lack of inventory was most severely felt at the lower end of the market. In fact, the inventory of for-sale entry-level homes fell -25% in April compared to one year ago.
According to Frank Nothaft, chief economist with CoreLogic, “The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring. If (however) unemployment remains elevated in early 2021, then we can expect home prices to soften.”
CoreLogic is predicting that home values will go down nationally by -1.3% by April 2021. Though such a drop sounds like next to nothing, home prices have not dropped on a national level since the Great Recession and before that, not since the Great Depression. Meanwhile, the National Association of REALTORS® (NAR) is predicting that sales in 2020 will drop -11% compared with home sales in 2019.
Frank Martell, president and CEO of Corelogic, said, “Tight supply and pent-up demand, particularly among Millennials provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term.”
Martell continued. “The next 12 to 18 months are going to be very tough times for the broader economy. As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery.”
Thanks to CoreLogic, the National Association of REALTORS® and CNBC.