The Impact of COVID-19 on the Housing Market

The spread of COVID-19 was officially declared a pandemic by the World Health Organization on 11 March. Shelter-in-place orders have been issued for cities across the country and 23 million individuals were reported claiming Pandemic Unemployment Assistance benefits by October 2020. Additionally, big firms started rethinking their office needs and some commercial real-estate deals were put on hold. Therefore, it is evident that the pandemic has already caused widespread disruption in the housing market in the U.S., while the main question remains whether COVID-19 will cause housing to collapse.

The housing market is one of the main sectors that are very vulnerable to economic shocks and needs to adapt to the challenges posed by the spread of the disease. Generally, Covid-19 had an impact on the U.S. housing market and the number of homes listed for sales has decreased. However, the common assumption is that the market has remained relatively competitive and below are presented some of the key facts of the housing market as of October 2020, according to Redfin:

  • Home selling median prices increased by 15% in October 2020 over the past year to $320,625 – the highest on record.
  • Pending sales went up to 32% and new listings of homes for sale went up to 8% from a year earlier.
  • Available inventory – the number of homes listed for sales during October 2020 fell by 29% compared to 2019, reaching the lowest figure over the last decade.
  • Mortgage applications have increased by 26% from a year earlier during October.
  • Mortgage rates were down just slightly to 2.8%.
  • Sales of previously owned homes rose to the highest level in 14 years.

However, the level of the impact on the housing market is still to be observed, as it is uncertain how long the COVID-19 pandemic will last.