Coronavirus has been on the minds of just about everyone these days, especially when it comes to the local real estate market. Buyers want to know if now is the right time to buy a home while sellers also want to know if now is the right time for them to sell.
Reversing a decade-long housing market hot streak, Central Texas “continued to feel the stark effects” of the coronavirus pandemic last month, as May home sales plunged nearly 30% and already scarce housing supply dropped to critically low levels, according to the Austin Board of Realtors.
Despite the double-digit sales decline, local real estate agents and housing industry experts point out that sales are a lagging indicator of market activity. Some agents say activity has been picking up and the market is faring relatively well overall.
But the May numbers reflect the inescapable impact of the COVID-19 crisis. Residential sales in the five-county Austin-Round Rock region fell 29.2% compared to May 2019, with 2,697 single-family homes, townhomes and condominiums changing hands, the board said.
The region’s median home-sales price increased 0.7% year-over-year, with half the homes selling for more than $329,893 and half for less. Homes spent an average of 47 days on the market, three fewer than the prior May, the board said.
“Days on market declining is a very good indication of continuing demand for appropriately priced product,” said Charles Heimsath, an Austin real estate market consultant. “But with slower population growth and employment uncertainty I see continued weakness in sales volume throughout the summer.”
Within Austin’s city limits, continued demand and limited supply drove home prices up, the board said. That’s a trend that has been playing out across the region in recent years, leading to sharply rising prices.
In Austin last month, the median price rose 10.7% year-over-year, with half of the homes selling for more than $424,050 and half for less. Residential sales dropped 36.6% to 826 sales. The board said sales fell due to fewer listings.
New listings were down 18.7%, active listings decreased 13.5% and pending sales declined 4.9%. Monthly housing inventory decreased 0.2 months year-over-year to 1.7 months.
The pandemic has exacerbated the inventory shortage, the board said. In addition to Austin’s declining supply, inventory fell to less than two months in Travis and Williamson counties, the board’s data showed.
The Austin-Round Rock region as a whole saw an 18.8% decline in active listings (6,086 total), pushing housing inventory down to two months, 0.6 months lower than in May 2019, the board said.
Experts consider a housing supply of six to 6.5 months a healthy market with supply and demand in balance.
“We’re seeing home sales drop because we simply don’t have enough inventory on the market,” Romeo Manzanilla, president of the Austin Board of Realtors, said in a written statement. “We recognize there’s still an element of discomfort with listing one’s home during the pandemic and Austin realtors are taking every precaution to ensure safe and efficient practices across the market. There’s a lot of opportunity for sellers who are ready—new listings have increased visibility and homes are spending less time on the market.”
Mark Sprague, a local housing industry analyst, said real estate was significantly impacted by the slowing economy resulting from the pandemic. Its effects began showing up in the market in the latter part of March, local agents and experts have said.
“It was no surprise May sales declined and we’ll likely see the same in June and July,” said Sprague, who is state director of information capital at Independence Title in Austin. That’s because monthly sales numbers lag by anywhere from one to three months from when the homes initially went under contract.
Sprague said more inventory is the solution.
“Until more homes are put on the market, we won’t see home sales recover anytime soon,” Sprague said.
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