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Pandemic impact on sales diminishing in R.I.’s housing market

While Rhode Island’s single-family home sales dropped 14.6 percent year-over-year in June, the decline was a significant improvement to the prior month when sales fell by more than 30 percent compared to 12 months earlier.  A review of month-to-month sales data from the Rhode Island Association of REALTORS also portrayed diminishing impact from COVID-19.  Single-family home sales rose 30 percent from May to June as closings resumed during the initial phase of the economy’s reopening.  Pending sales also increased 13.7 percent last month, following three months of year-over-year decline. Pending sales, or those under contract but not yet closed, are typically a sign of closed sales in the one to two months ahead.

The median price of single-family home sales in June rose 3.2 percent to $309,000. Apart from January of 2017, monthly median sales prices have been consistently escalating from the prior year, fueled by low interest rates, scarce inventory and pent-up demand.  The monthly supply of single-family homes for sale remained the same in June as the prior month at 2.7 months of supply, an indication of a strong sellers’ market.

“In all the ways the coronavirus has impacted the housing market, its impact on the supply of available properties is the most severe. There is no question that the pandemic has reduced an already low supply of homes for sale by causing potential sellers to delay or reverse their plans to sell,” said Shannon Buss, 2020 president of the Rhode Island Association of Realtors. “The irony is, given the lack of available homes to choose from and the tremendously low interest rates which are increasing demand, right now sellers are getting top dollar for their homes.”

Completed sales in the condominium market remained low in June, with closing activity showing roughly the same 38 percent decline as the previous month and year.  Pending sales however, though still below last year’s level, were down only .9 percent following three months of double-digit annual decline.  The median sales price climbed five percent to $250,000.

Multifamily home sales activity fell by 19.1 percent since June of 2019. Like the trend seen among single-family home sales, that decline was roughly half the year-over-year decrease seen in May.

With a 7.8 percent growth in median sales price from 12 months earlier, the multifamily home market saw the largest jump in median price of all property types. The supply of multifamily properties on the market fell 25.4 percent from June of 2019, adding to the already fierce competition among sellers.

“Given what we’ve gone through, our outcome could have been much worse. The (real estate) industry quickly adapted to the new normal which was critical since housing is a huge economic driver. We’re hopeful that housing trends will continue to improve and we’re comforted by the knowledge that if we experience another surge of the virus, we’re better equipped than ever to ensure our clients’ safety while meeting their transaction goals,” said Buss.

According to an economic impact study by the National Association of Realtors, each home sale last year circulated $89,795 back into Rhode Island’s economy from direct real estate services and indirect expenditures like remodeling and home goods. That amount accounted for 18.2 percent of the gross state product.

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