Market Update
With Brad O’Connor Ph.D. for May 2020
TRT:  6min 05 sec
Video Transcription


Brad O'Connor directly addresses camera:  Florida Realtors housing market statistics for May 2020 have just been released, and they show several signs of a recovery from the titanic economic shock that was the onset of the COVID-19 pandemic in the U.S.
The most significant evidence we have of a rebound are the year-over-year changes we see for new pending sales in May. In the single-family home category, we actually experienced a 2.3 percent *increase* in the number of homes going under contract compared to May of last year. This is in significant contrast to what we saw in April, when new pending sales were *down* by 35 percent.
New pending sales of condos and townhouses in May, meanwhile, failed to match their pace of a year ago, falling by close to 17 percent compared to May of 2019. That's part of a continuing statewide trend of relative weakness in the condo and townhouse market that we've observed throughout this turbulent period. Still, this decline is a major improvement over April's 57 percent decline in this category. So condo and townhouse sales are clearly on a recovery trajectory right now, but they are simply being outshone by the much more substantial recovery in single-family home sales.
In terms of the number of properties coming on to the market in May, however, condos and townhouses performed better than single-family homes, posting an increase of 1.8 percent compared to May of last year, after having fallen by 39 percent year-over-year in April.  New listings of single-family homes, on the other hand, were down 8.7 percent year-over-yearÑbut again, this is a significant improvement over April's 27 percent decline.
Unsurprisingly, closed sales took a big hit again in May. Single-family closings were down 36% year over year, while condo and townhouse closings were down 50%. This hit was, of course, very much expected based on what we were seeing in the pending sales data in March and April, but the good news is that this is likely the worst of it for now. As I already mentioned, May's pending sales clearly show we're recovering, it's just that we won't see this recovery in closed sales until a month or two from now when these deals are finalized.
Turning now to home values, there's more good news in that the sale prices for the home sales that closed in May remained stable. The single-family median sale price was up by 1-and-a-half percent versus last year, rising to $270,000. Likewise, the condo-townhouse median sale price increased as well, rising by 3.3% up just over $200,000.
Inventory levels remain an area of concern. We're only down a little over 4 percent from last year in the condo-townhouse category, but our inventory shortage has always pretty much been about single-family homes, particularly on the affordable side of the pricing spectrumÑand on the single-family home side, as of the end of May, we were down over 18 percent from where we were last year, in terms of statewide inventory. In some markets where single-family home listings are scarce, this very well could lead to impeded sales growth as we move on through the summer and fall. On the luxury end of single-family pricing spectrum, however, there is relatively more inventory, so the next few months could yield a great opportunity for potential buyers in this segment.
Overall, housing demand continues to be driven by record-low mortgage rates that show no signs of rising significantly any time soon. June could be a very strong month for sales given the high levels of pent-up demand that has likely been released in recent weeks. Credit remains tight, but there is some evidence that it's loosened up just a bit compared to where we were in April, as lenders have adjusted to the situation and incorporated new information about the performance of the economy. They continue to face an enormous volume of applications, however, both for purchases and refis, so this is affecting their ability to accommodate the demand we're seeing.
The long-run outlook for housing in Florida and elsewhere in the U.S. is, unfortunately, still clouded by the progression of the COVID-19 pandemic. Most of the official economic forecasts from both public- and private-sector economists as of late are baking in an assumption that there will not be major resurgence of the virus this year, so interpret these figures with great care. A large second wave of this pandemic is the greatest threat to the housing market and greater economy right now, so it's important that we all continue to do our part to limit the spreadÑespecially as we continue to try to reopen the economy. 
We've already proven we can keep this virus at bay through simple, common sense practices, so our goal should be to fight the natural human tendency in all of us to become complacent. Every time we make a decision to take the proper precautions, like wearing a mask in public and washing our hands thoroughly, we are not only potentially saving ourselves from infection, but we are breaking a potential chain of infections that we could start unknowingly if we were to become infected. We have to continue doing this in order to continue to get our economy back on trackÑit's as simple as that. Again, the alternative is letting the virus get out of control again, and that will stop the reopening of the economy in its tracks. Remember, in the long run, the health of the housing market is largely determined by employment, so we need to get the economy back online. We can't really afford any major setbacks right now.
Assuming we can avoid a significant spread of the virus over the next few months, the housing market outlook looks quite good for the state as a whole. But how about your particular market area? Well, you can certainly check out how your market compares to the state overall if you're a member of Florida Realtors. As always, you can find your local area statistics at floridarealtors.org/research, or through our new interactive web application, SunStats, which you can find at sunstats.floridarealtors.org. Take care, everyone!