First-time homebuyers and investors looked at different directions in April as the effects of lockdown and social distancing measures continue to dictate buying confidence across the nation, the latest survey says.
The first-time homebuyers share of the market have risen in April, the NAR April 2020 Realtor Confidence Report Index Survey says. The increase was up to 36 percent from 32 percent from a year ago. Homebuyers are on the rise, apparently due to low mortgage rates and because there is less competition from investors.
Sales share for investment rental declined to six percent from 11 percent in April 2020, dragging cash sales of existing home purchases to 15 percent from 20 percent for the same period last year. The 30-year fixed mortgage, meanwhile, dropped to a record low of 3.3 percent.
Impact of Social Distancing
Potential investors, the report furthered, might have chosen to defer investment plans due to perceived greater financial risks tied to renting properties while the health crisis persists. Social distancing measures have disrupted many of the industries that employ the likely renters of these properties.
Urban areas also shed some buyers due to social distancing measures. The share of urban areas or central cities in home sales dropped to 15 percent in April from 22 percent last February 2020.
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Condominium sales also dropped considerably in April in comparison to single-family homes sales. Seasonally adjust rate was down to 390,000 units--26.4 percent lower than March's annual rate.
On the other hand, the single-family homes seasonally adjusted annual rate declined to 3.94 million--that's a 16.9 percent drop.
Virtual Real Estate Tours
In-person tours have declined in April 2020, due to social distancing measures, to 63 percent of the total survey respondents from 98 percent last February. However, forty-six of the surveyed realtors said that they conducted virtual tours or virtual showings and open houses.
Four percent of those buyers purchased their homes solely on virtual tours, while five percent of sellers sold their homes using virtual tours/open house/showing only.
READ MORE: US Homebuilding Plunges to a Record Low in April
House prices to remain steady
Twenty-six percent of respondents said that prices are less likely to fluctuate in the next three months, while 27 percent expect that the price will rise by one to five percent year-on-year.
Realtors have listed an average of one property in April, half of the February 2020 average. New listing and new contracts have slowed down as of May 17.
New contracts were 20 percent year-on-year as compared to its 40 percent decline in the last week of April 2020. Also, new pending sales are down by just 29 percent as compared to its steep decline of 41 percent in the first week of May 2020.
The RCI is a monthly survey sent out to realtors to gather information about market conditions, buyers' and sellers' characteristics, and the issues that affect home buying and real estate transactions. Fifty thousand realtors were selected to participate in the April 2020 Confidence Index Survey. The online survey ran from April 4-12, 2020, were 4,964 have responded to the survey; 1,946 of which had a client.
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