Home inventory shortage cuts into pending sales activity

Pending home sales declined the week of June 28, which is likely the result of a lack of inventory on the market to buy, Redfin said.

Pending sales decreased 8.2% year-over-year, compared with a 3.9% year-over-year increase a week earlier. But seasonally adjusted, the drop was only 3%, Redfin said.

New listings were down 8.3% from the same week in 2019, and total listings were down by 27%.

"Homebuyers are becoming frustrated because they're just not seeing a lot they want to buy," Irma Jalifi, a Redfin agent from Houston, said in a press release. "The lack of homes for sale has caused two of my buyers to just give up, when they had been trying to find a home before their leases were up at the end of July. It's disappointing to spend so much time and effort and come up empty-handed."

Redfin asserted that the drop in pending sales was also likely the natural consequence of the boomlet from the month before. Pent-up demand resulted in a record gain in May as many regions emerged from lockdowns, according to the National Association of Realtors.

However, another NAR report noted that May's existing-home sales were down.

HouseCanary, in its own market report, said listings were down 8.1% for the week of July 3 compared with the previous week and by 28.1% since the week of March 13, when many of the coronavirus-related restrictions were put in place.

"Last week's decline in homes listed and spike in listings removed suggests that sellers are taking a wait-and-see approach as pandemic-driven uncertainty remerges," said HouseCanary CEO Jeremy Sicklick. "In the near-term, we should still continue to see a supply-constrained housing market, which will help keep prices stable and demand on strong footing. The longer-term outlook is murkier, however, as the nation confronts the prospect of our current recession's impact finally setting in and an election year unfolding."

The shortage also means fewer listings are getting price cuts as they remain on the market, Zillow said in a separate release. Of the homes for sale as of June 27, 4.1% had a price cut since first being listed, compared to 5.6% at this time last year.

"This may be our strongest signal yet that sellers have the upper hand in the housing market today, and they know it," said Jeff Tucker, an economist at Zillow. "Many buyers still think they can make lowball offers and score a great deal in the midst of today's economic turbulence, but sellers are holding firm on list prices. For-sale inventory has been setting new record lows this spring, so sellers know that buyers are starved for options."

Home prices are on the rise because of the lack of inventory. The median price for new listings during the week of June 28 was $330,000, the highest point this year and up 12% from the same week in 2019, Redfin said.

"Single-family homes priced between $300,000 and $600,000 are flying off the market right now," said Maria Garcia-Gonzalez, a Redfin agent from Miami. "We have to educate our homebuyers about what is happening right now, because they tend to think that due to the coronavirus things aren't selling, or prices will drop and they can wait. In reality, for affordable single-family homes you have to be ready to make an offer close to list price and expect multiple offers with homes going off the market quickly."