While the full impact of COVID-19 on the housing market continues to be monitored, the direct impact on the inventory already is quite evident. Housing markets throughout the Commonwealth experienced dramatic declines in active listings during the past several months as more would-be sellers continue to wait to see how the market responds to the pandemic. At the end of the second quarter, there were 688 active listings on the market in the Lynchburg Association of Realtors footprint, which is 454 fewer active listings than there were at the same time last year, a 40% plunge.
The supply in the association’s housing market already had been shrinking steadily for much of the past several years, but COIVD-19 has accelerated the inventory decline. The tight market supply likely is constraining sales activity in some areas and continues to put upward pressure on home prices in the region. The supply declines accelerated in many parts of the state, as well. The overall inventory of active listings in Virginia at the end of the second quarter was 39% lower than it was a year ago. There was about 2.2 months of supply at the end of the second quarter in the association’s footprint, down from 3.9 months last year.
The months of supply is calculated by taking the average monthly sales during the preceding 12-month period and dividing it by the inventory of active listings. In most housing markets, a supply below six months tends to favor sellers rather than buyers.