For-sale inventory drops by 20%, as coronavirus halts rent growth

While the spring home-selling season was already off to a rough start thanks to the novel coronavirus, some cities saw drops in annual supply nearing 40% in early May, according to Zillow.

With fewer people moving and less construction happening during the pandemic, U.S. housing inventory fell 19.9% year-over-year as of the seven days ending May 10.

The number of listings dropped across each of the 36 largest metro areas, with decreases of 39% in Seattle, 37.7% in Philadelphia and 36.6% in Boston leading the way. The smallest declines came at 4% in Atlanta, 5.1% in San Antonio and 6.9% in Houston, according to Zillow's real estate market report.

But there are signs that sellers are returning to the market after being frightened away at the start of the outbreak. New listings increased 12.5% month-over-month for the week ending May 10, the report found. Detroit had listings skyrocket 212.5% compared to the month before, with Pittsburgh and San Francisco growing 72.8% and 42%, respectively.

A sixth of the top housing markets posted declines from April to May, with drops in inventory of 8.2% in Washington, D.C., and 5.3% in both Portland, Ore., and Riverside, Calif.

Detroit also led newly pending sales, with a 173.7% spike from the month before. Pittsburgh's sales were up 88.3% and Denver's 66.8% followed.

"The for-sale market continues to improve and seemingly has the bottom in the rearview mirror, but rent growth has slowed significantly," Skylar Olsen, senior principal economist at Zillow, said in a press release. "Housing was in a generally strong position before the pandemic, with low inventory and high prices shutting many would-be buyers out and creating unusually high demand for rentals."

"Rents soared, making it difficult for many to build emergency savings to tap into at a time like now. We're seeing rents slow now as some people are no doubt pursuing more affordable options such as moving back in with parents, moving to a less expensive area or doubling up in instances where it can be done safely," Olsen continued.

Overall, annual rent prices increased 2.9% in April, the smallest rate since December 2017. The pace also slowed from a 3.4% bump in March. The drop in rent price growth from March to April was the largest decrease Zillow found since at least 2014.