Before the spread of the coronavirus, all the housing market's stars were aligned: Builders were confident, demand high, interest rates low, and construction was ramping up as the housing industry prepared for its best season in a long time. No one expected a global pandemic to pull the rug from under not just the housing industry, but the entire nation. Now, after cautious warnings that the housing market may slow down despite holding steady, the effects of the coronavirus’ spread are showing weakened buyer demand as it dropped from 27 percent growth in the beginning of 2020 to one percent in the past week.
On Thursday, the housing market took a turn for the worse. A week ago, we reported that nationwide homebuyer demand had weakened meaningfully, but from high levels. We measure homebuying demand by looking at the annual growth rate in people going on their first home tours with a Redfin agent.
Growth in Home Buying Demand: Thirty to Zero in Two Weeks
This week, home-buying demand took a big hit, with year-over-year growth dropping from nearly 27% in January and February to 1% growth over the past seven days. There has in fact been a 1% contraction in demand over the past three days. This decline is unsurprising, now that governments in San Francisco and Philadelphia are telling residents to stay home. Traffic growth to Redfin’s website has also slowed from around 20% through the first two months of 2020 to high single digits over the past week.