May 2020: Austin Real Estate Market Report

Uncertainty Transitions into Optimism

Seven weeks ago, on March 13th, the COVID-19 outbreak was declared a national emergency. In an effort to combat the virus, the government issued unprecedented stay-at-home orders, shutting down America’s economy virtually overnight.

For a period afterwards, the national housing industry was in a nosedive, with new listings and pending sales dropping to a fraction of prior levels from earlier in March, as well as compared to the same time from March of last year.

Like most of the country, the immediate impact in Austin was significant. But a dramatic increase in pending sales and number of new listings over the last few weeks could already be reflecting the start of a swift recovery. Read on to learn more about how Austin compares to the rest of the nation and what it means for your real estate future.
 

Real Estate Market Report

Nationally, pending home sales fell in March, seeing expected declines as a result of the coronavirus outbreak, according to the National Association of Realtors®. Each of the country’s four major regions saw drops in month-over-month contract activity and year-over-year pending home sales transactions.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, decreased 20.8% to 88.2 in March. Year-over-year, contract signings declined 16.3%. An index of 100 is equal to the level of contract activity in 2001.

“The housing market is temporarily grappling with the coronavirus-induced shutdown, which pulled down new listings and new contracts,” said Lawrence Yun, NAR’s chief economist. “As consumers become more accustomed to social distancing protocols, and with the economy slowly and safely reopening, listings and buying activity will resume, especially given the record low mortgage rates.”

“The usual Spring buying season will be missed, however, so a bounce-back later in the year will be insufficient to make up for the loss of sales in the second quarter,” he said. “Overall, home sales are projected to have declined 14% for the year.”

The National Existing-Home Sales for April will be reported May 21 and the next Pending Home Sales Index will be May 28.

Austin Metropolitan Statistical Area

In the greater Austin area, early indicators from April’s sales figures of single family homes show a remarkable recovery from the dramatic drop in new listings and pending sales activity following the March 13th declaration of a national emergency.

After six-weeks of rapidly decreasing sales volume and great uncertainty, Travis County finished the last two weeks in April with a surge in pending sales of single family homes that equaled over 90% of the sales activity as compared to the same time in 2019. Even more impressive, in the final week of April, pending sales in Williamson County actually outpaced 2019’s year-over-year figures. These numbers show that, in contrast to other struggling metropolitan areas, such as Philadelphia, Boston and New York, Austin’s market is rebounding with strength in these first few uncertain weeks out of quarantine.

Pending Sales Reflect Strong Demand

Pending sales from the last two weeks in April are the leading indicator of continued strong demand, which keeps upward pressure on home values in the Austin MSA. However, it’s the relationship between the number of new listings as compared to the number of pending sales in a month that drive the market’s direction, velocity and monthly housing inventory.

Austin’s severe housing shortage got some much needed relief thanks to an extended period of almost two months, during which supply (new listings) outstripped demand (pending sales), nudging inventory upward and the strong Seller’s market toward—but nowhere near—a Balanced market.

Still a Strong Seller’s Market

In context of COVID-19, any calculation for the monthly housing inventory based on the average number of sales per month for the past 12 months will not reflect the rapidly changing current market conditions. Therefore we’ve also looked at the actual number of closed sales in April, and also pending sales over the final 14 days in April to best interpret current market dynamics.

Going into May, Austin remains a strong seller’s market with estimates of the monthly housing inventory ranging between a 1.5- to 2.3-month supply depending on the absorption rate’s underlying timeframe assumption.

 

Travis County Report

Representing over 60% of the Austin MSA’s gross sales volume (dollars), Travis County is a clear example of the local housing market’s strength and resiliency.

Leading into March, Travis County’s already anemic housing inventory continued to tighten, with new listings of single family homes down 17.9% in January and 17.4% in February as compared to 2019. Meanwhile, pending sales showed an increase year-over-year of 4.1% and 6.7% respectively.

The first two weeks in March showed early signs of a slowdown, with pending sales dropping below last year’s figures by 9.8% and 17.9% respectively vs. the same time last year.

Then in the week following the declaration of a National Emergency, pending sales dropped 21.4% year-over-year followed by a three-week free fall of 42.5%, 44.3% and 47.2% drops year-over-year, respectively.

 

Market Rebounds in Mid-April

The six-week run of increasingly worse sales figures gave us more than a month of massive uncertainty with speculation that the economy was headed into not just a recession, but a depression, the likes of which haven’t been seen in over 80 years.

However, beginning mid-April, there was a dramatic turnaround with pending sales jumping to a much improved 20.7% drop year-over-year, followed by the final full week of April, which rose to within 9.1% of 2019’s sales figures!

Source: Austin Board of Realtors Travis County, Single-Family Properties, as of April 30th, 2020

 

New Listings per Month

Travis County’s year-over-year numbers for new listings of single family homes per month is down for every month of 2020 as compared to 2019. April had 1,431 new listings as compared to 2,003 for April 2019, a 28.6% drop year-over-year.

Source: Austin Board of Realtors Travis County, Single-Family Properties, as of April 30th, 2020
 

Market Direction

2020 began with a very strong Seller’s market and more pending sales per week than new listings to drive a steadily shrinking housing inventory for the first 8 weeks, or two months of the year.

However, in the last few days of February the COVID-19’s impact on the market began to emerge. Both new listings and pending sales were down year-over-year, but pending sales were hit harder and the trend started to shift toward more new listings than pending sales per week for a stretch of seven weeks that ended in the middle of April.

As a result, for the first time in a long time, Travis County saw a growing inventory of listings and change in direction toward a balanced market from February through mid-April.

Then, the final two weeks of April saw a big uptick in pending sales of single family homes that hovered just slightly above or below the number of new listings, which nets out to no significant directional movement at the end of the month.

Source: Austin Board of Realtors Travis County, Single-Family Properties, as of April 30th, 2020

Maxavenue’s Weekly Supply/Demand % is calculated by the number of new listings for the week divided by the number of pending sales in the week. 100% indicates no net change in listing inventory. Percentages over 100% indicate a growing inventory of listings for sale while anything lower than 100% reflects a shrinking inventory.

 

Monthly Housing Inventory

Going into May, Travis County’s monthly housing inventory ranges between a 1.5 to 2.3-month range depending on the absorption rate’s underlying timeframe assumption.

In context of COVID-19, the average number of sales per month for the past 12 months will not reflect current market conditions, so we’ve also looked at the actual number of closed sales in April, and also pending sales over the past 14 days to best interpret current market dynamics.

Travis County’s pending sales were very strong for the 14-day period at the end of April, which outpaced the 12-month average, as well as April’s average which was dragged down by the month’s slow start.

Source: Austin Board of Realtors Travis County, Single-Family Properties, as of April 30th, 2020

Monthly Housing Inventory* calculations based on 2,153 active listings on April 30th, 2020 and absorption rates (number of sales per month) from three timeframes:

  • – 12-month Closed Sales Average: 1.6-month inventory based on 1,324 sales per month
  • – April 2020 Closed Sales: 2.3-month inventory based on 937 number of closed sales for April 2020
  • – Last 14 Days Pending Sales: 1.5-month inventory based on a forecast of 1,479 sales per month – projection extrapolated to a full month equivalent from last 14 days pending sales

(*) Monthly Housing Inventory is calculated by dividing the number of Active Listings by the Absorption Rate (number of Sales per month).

Regardless of the timeframe used to calculate monthly housing inventory, Travis County remains a strong seller’s market. Robust sales of single family homes over the last 14 days of April bodes well for continued price appreciation as the short-, mid- and long-term impact of COVID-19 continues to unfold.

                                      

Williamson County Report

Representing apx. 30% of the Austin MSA’s gross sales volume (dollars), Williamson County is another impressive example of the local housing market’s strength and resiliency.

Leading into March, Williamson County saw fewer new listings of single family homes as compared to last year, down 13.6% in January and 17.7% in February as compared to 2019, while pending sales increased year-over-year by 13.5% and 9.2% respectively.

The first week in March remained strong with pending sales 24.2% above last year’s figures, however as COVID-19’s impact was beginning to emerge, pending sales in the next week dropped to 6.8% below last year’s mark.

Then after the declaration of a National Emergency, Williamson County had four weeks in a row of year-over-year declining sales, down 27.8%, 45.5%, 30% and 41.9% as compared to last year.

As we saw in Travis County, there was a huge jump in the third week of April with pending sales in Williamson County springing back to just under 3.1% of last year, followed by an even stronger week to close out April with pending sales once again over 2019’s numbers, up 3.8% year-over-year.

 

Source: Austin Board of Realtors Williamson County, Single-Family Properties, as of April 30th, 2020

 

New Listings per Month

Williamson County’s year-over-year numbers for new listings of single family homes per month are down for all four months of 2020 and April had 1,065 new listings as compared to 1,329 for April 2019, a 19.9% drop year-over-year.

Source: Austin Board of Realtors Williamson County, Single-Family Properties, as of April 30th, 2020

 

Market Direction

Back in January Williamson County began the year with a very strong Sellers market and more pending sales per week than new listings for seven of 2020’s first eight weeks.

However, in the last few days of February the COVID-19’s impact on the market began to emerge. Both new listings and pending sales were down year-over-year, but pending sales were hit harder and the trend started to shift toward more new listings than pending sales per week for eight of the next nine weeks ending in the last week of April.

As a result, Williamson County saw a growing inventory of listings and change in direction toward a balanced market in March through mid-April.

Then, the final two weeks of April saw a big uptick in pending sales that hovered just slightly above or below the number of new listings, which nets out to no significant directional movement at the end of the month.

Source: Austin Board of Realtors Williamson County, Single-Family Properties, as of April 30th, 2020

Maxavenue’s Weekly Supply/Demand % is calculated by the number of new listings for the week divided by the number of pending sales in the week. 100% indicates no net change in listing inventory. Percentages over 100% indicate a growing inventory of listings for sale while anything lower than 100% reflects a shrinking inventory.

 

Monthly Housing Inventory

Going into May, Williamson County’s Monthly Housing Inventory ranges between a 1.6 to 2.6-month supply depending on the absorption rate’s underlying timeframe assumption.

In context of COVID-19, the average number of sales per month for the past 12 months will not reflect current market conditions, so we’ve also looked at the actual number of closed sales in April, and also pending sales over the past 14 days to best interpret current market dynamics.

Williamson County’s pending sales were very strong for the 14-day period at the end of April, which outpaced the 12-month average, as well as April’s average which was dragged down by the month’s slow start.

Source: Austin Board of Realtors Williamson County, Single-Family Properties, as of April 30th, 2020

Monthly Housing Inventory* calculations based on 1,896 active listings on April 30th, 2020 and absorption rates (number of sales per month) from three timeframes:

  • – 12-month Closed Sales Average: 2.1-month inventory based on 922 sales per month
  • – April 2020 Closed Sales: 2.6-month inventory based on 742 number of closed sales for April 2020
  • – Last 14 Days Pending Sales: 1.6-month inventory based on a forecast of 1,207 sales per month – projection extrapolated to a full month equivalent from last 14 days pending sales

(*) Monthly Housing Inventory is calculated by dividing the number of Active Listings by the Absorption Rate (number of Sales per month).

Regardless of the timeframe used to calculate monthly housing inventory, Williamson County remains a strong seller’s market. Robust sales of single family homes over the last 14 days of April bodes well for continued price appreciation as the short-, mid- and long-term impact of COVID-19 continues to unfold.

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Maxavenue
Author:
Maxavenue Staff