More than half of homes selling within two weeks

A new report from Redfin shows how inventory shortages are driving a chain reaction that includes accelerating home prices, unprecedented competition and surprisingly, the suppression of much-needed new listings.

The Seattle-based real estate brokerage looked at key metrics across more than 400 U.S. metropolitan areas during the 4-week period ending February 7.

According to the report, the median home sale price in the U.S. increased 15% year over year to $318,750, while asking prices of newly listed homes hit a new all-time high of $334,770, up 10% from the same time a year ago.

In a typical year, asking prices do not surpass the previous year’s peak until March.

But determined buyers are not letting rising prices stop them. Pending home sales during that 4-week period were up 29% year over year.

For the week ending February 7, the seasonally adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other services from Redfin agents—was up 63% from the same period a year ago.

Buyers are also buying more quickly to get ahead of the competition. The report showed that 52% of homes that went under contract had an accepted offer within the first two weeks on the market, well above the 43% rate during the same period a year ago.

This is the first time the four-week average has surpassed 50% since at least 2012 (as far back as Redfin’s data for this measure goes). During the week ending February 7, the rate was 57%.

Homes across the country are also selling for close to listing prices. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased slightly to 99.3%—1.6 percentage points higher than a year earlier.

Meanwhile, new listings of homes for sale were down 11% from a year earlier.

Active listings (the number of homes listed for sale at any point during the period) fell 37% from 2020 to a new all-time low.

“There is a serious lack of new listings, and although prices are through the roof, homeowners are reluctant to sell, because it’s so hard to buy again unless you are moving to a less expensive area where you can afford to outbid other buyers,” said Redfin chief economist Daryl Fairweather in the report. “Sellers who are concerned about finding their next home are asking buyers for a rent-back agreement, which allows the seller to stay in the home until they can move into their next one. Offering a rent-back agreement can also be a winning strategy for buyers with flexible timelines.”

For more on changing buyer preferences, see how the preferences for large kitchens and remote work-friendly homes are driving new purchases.

Remote workers could continue to drive the post-pandemic market

The pandemic-driven trend of working from home is driving home buyers to suburban areas in search of larger residences, and it could just be the beginning, according to a new report from the real estate media company Homes.com.

Homes.com President David Mele discussed the report at the National Association of Real Estate Editors 54th Annual Real Estate Journalism Conference, noting that while the flight to the suburbs trend is real, it also is likely to continue well after a vaccine becomes widely available.

“This is really just getting started,” Mele said in the panel Suburban Migration and Coronavirus Changes. The trend could increase post-pandemic, he said, because many workers are still waiting to see if they will work from home permanently.

Homes.com’s study of more than 1,000 consumers and 600 real estate professionals shows that buyers are not only moving away from urban areas, but they’re also making more long-distance moves.

Mele said that the survey revealed that 70% of respondents said their pandemic relocation is permanent. One out of three respondents who relocated in the last 12 months did not plan to move prior to the pandemic. And one in four said the move “was sparked by a change in their job situation, presumably caused by the pandemic,” the report noted.

Forty-five percent of those who haven’t moved said they would if given the opportunity to work from home, and 20% said working remotely made their move possible.

Industry professionals were optimistic about 2021 as well, with a majority of industry experts (57%) anticipating continued robust homebuying activity. Another 28% of respondents said they expect more transactions next year.

“The surge in the work-from-home population has rewritten the playbook for many homebuying and rental decisions, from when and where to relocate, to what people are looking for in their next residence,” Mele said in a press release. “That, in turn, is prompting changes for real estate professionals, many of whom are expanding their market area to better serve clients who are moving farther than before. If working from home becomes standard operating procedure for many companies, as predicted, these changes will be with us for years to come.”

Other highlights from the survey include:

  • 40% who moved or plan to are moving more than 100 miles away, and are moving over 500 miles.
  • Approximately 30% are leaving cities for the suburbs.
  • 15% are looking for less populated areas.
  • 78% of real estate professionals said requests for home offices are the No. 1 change. Larger square foot was next at 57%, followed by outdoor recreational spaces at 45%, and upgraded kitchens at 44%.
  • The buyer’s market has made made sellers less likely to accept a contingency (69%), show a house without a pre-approval letter (59%), negotiate on repairs (57%) or negotiate with buyers for a quick sale (40%).