The availability of homes for sale fell by an unprecedented amount in May. At the end of the month, there was a total of 26,828 active listings throughout Virginia, a decline of 34% compared to the end of March 2019, or nearly 14,000 fewer listings. As buyer activity rebounds in June, a lack of available inventory will be a significant constraint on the market. Competing offers, bidding wars and falling days on the market are likely in the weeks and months ahead in many local markets.
Because active listings are falling faster than closed sales, the months of supply continues to decline. At the end of May 2020, there was an estimated 2.58 months of supply statewide, down from 3.97 months in May 2019. In some local markets, however, inventories are even tighter, with less than one month’s supply. The months of supply statistic is calculated by taking the average monthly sales during the preceding 12-month period and dividing it by the inventory of active listings.
Historically, a supply below five or six months has tended to favor sellers rather than buyers. While there are variations across the state, both in terms of inventory and months supply, most markets remain sellers’ markets during COVID-19.
Pending sales are the number of homes that have gone under contract in a given month but have not yet closed. Trends in pending sales can be a leading indicator for future home sales one or two months out. Pending sales figures for May suggest the housing market in Virginia has begun to turn around.
At the end of May, there were 11,.798 pending sales statewide, down 1,832 or 13.4%, compared to May 2019. Pending sales, however, jumped significantly between April and may. This spring, the number of pending sales in May was 24.2% higher than in April; by contrast, pending sales increased just 2.8% between April and May 2019.
Our local market continues to be strong with some of the trends referenced in our 2020 Second Quarter Housing Trends Report.