American home buyers are having to act faster than ever before in order to close a deal, forcing many of them to make hasty decisions about which house to buy and where to live.
According to a survey released Thursday by the National Association of Realtors, home sales between July 2020 and June 2021 sat on the market for a median of one week before going under contract. This is a decrease from three weeks a year ago and a record low in data dating back to 1989.
The rapid turnover explains why the number of homes sold reached multiyear highs during the Covid-19 pandemic, despite a stubbornly low inventory of homes for sale.
The pandemic resulted in an increase in home-buying demand. Households wanted more space to work from home and took advantage of low mortgage rates.
Simultaneously, supply has been constrained. Many prospective sellers did not list their homes due to caution about showing homes during Covid-19, a reluctance among some owners to enter the competitive housing market, and the ability to refinance at low rates.
Real-estate agents say that tools that allow shoppers to tour houses remotely and schedule showings online have also helped speed up the home-buying process in the last year.
Buyers have little time to commit to one of the biggest purchases of their lives in such a fast-paced market, and they sometimes forego traditional safeguards. To make their offers more competitive in a bidding war, many buyers have waived their right to terminate a contract due to a low appraisal or unfavorable inspection.
“There’s no plotting of where the Christmas tree will be and measuring for a couch in that scenario,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “You really are making that decision very fast.”
According to real-estate brokerage Redfin Corp., the markets with the fastest home sales in September were Indianapolis, Denver, Grand Rapids, Mich., Seattle, and Tacoma, Wash.
Homes typically sell for slightly less than their listing price, but the median sales price in the year ended in June was 100 percent of the listing price, the highest since NAR began tracking the data in 2002. According to NAR, the median sale price during that time period was $305,000, up from $272,500 the previous year.
Because of the continued scarcity of available homes on the market, many prospective buyers are forced to wait. According to a September survey conducted by the National Association of Home Builders, roughly two-thirds of active buyers have been looking for a home for at least three months. About 45 percent of those who shopped said they weren’t successful because they were constantly outbid by other buyers.
Although the hot housing market has cooled slightly in recent months, real estate agents report that many homes are still selling quickly and with multiple offers. According to Redfin, active listings fell 22% year on year in the four weeks ending Oct. 31.
“Instead of a house lasting three days on the market, it’s lasting seven days,” said Harold Torres, a real-estate agent in Orlando, Fla. For buyers, “negotiation and any type of wiggle room is not really there yet.”
The NAR survey also revealed that buyers did not travel far when looking for a new home. According to the survey, the average distance between a buyer’s previous residence and their new one was only 15 miles in the fiscal year that ended in June. Buyers cited neighborhood quality and proximity to friends and family as their top reasons for selecting an area, a shift from the previous year, when affordability and proximity to jobs trumped proximity to friends and family.
“Our priorities have changed,” Dr. Lautz said. “We needed our support system in the last year-and-a-half.”
The National Association of Realtors polled approximately 5,800 people who purchased primary residences in the fiscal year that ended in June.