The National Association of Realtors released their April Pending Home Sales Index This Week in Real Estate and to no surprise pending activity surged 51.7% compared to April last year. The significant year-over-year increase was expected given the immediate impact of the response to COVID-19. A year later we now know that the disruption to the housing industry was short-lived as we transition from the most competitive spring market in half a century to the summer selling season. Below are a few newsworthy events from the fourth week of May that influence our business:
April 2021 Pending Home Sales Dip With Fewer Homes Available. The National Association of Realtors released a summary of pending home sales data showing that April’s pending home sales pace declined 4.4% last month and spiked 51.7% from a year ago. A year ago, the pandemic had hit the housing market and homeowners were less likely to open their doors to show their property. A lot of Americans also decided to stay home and search online with virtual showings becoming the preference for looking for a home. All four regions showed double-digit gains from a year ago. The Northeast had the largest incline of 96.5%, followed by West with a gain in contract signings of 57.3%. The South had an increase of 45.3%, followed by the Midwest with the smallest gain of 39.4%. From last month, three regions showed declines in contract signings; only the Midwest had an incline of 3.5%. The Northeast had the largest decline of 12.9%, followed by the South, which had a dip of 6.1%. The West had the smallest decline, of 2.6%. April’s contract signings bring the pending index above the 100-level mark for the 12-consecutive month.
All-Cash Sales are Rising Sharply Amid Intense Buyer Competition. Amidst the most competitive spring market in 50 years, the share of all-cash sales to existing-home sales surged to 25% in April 2021 as non-first time buyers are paying all cash to increase the competitiveness of their offers, edging out first-time buyers, according to the April 2021 Realtors Confidence Index Survey. This is a significant increase from the 15% share one year ago and 20% share in 2019. The share of cash sales among non-first-time buyers has increased sharply to 33.5% in April 2021. In April 2019, only 26.3% of non-first-time buyers made an all-cash purchase. Meanwhile, 6% of first-time buyers made an all-cash purchase in April 2021, with little change from the average of 6% share since 2018. The share of cash buyers among primary residence buyers has also significantly shifted upwards. In April 2018 and April 2019, only about 12% of primary residence buyers made an all-cash purchase, but the share has increased to 15% as of April 2021.
Key Trends in the 2021 Cost vs. Value Report. The Cost vs. Value report aims at a very specific question: What value does a particular remodeling project add to the sale price of a home? Exterior improvement projects continuing a multiyear trend of providing the greatest return on investment (ROI) for homeowners. Indeed, 11 out of the 12 projects with the highest ROI were exterior improvements. At the top is the replacement garage door (No. 1), sidings (including manufactured stone veneer at No. 2), and windows. The indoor exception, sitting at No. 3, is the minor kitchen remodel – a modest facelift of kitchen surfaces that offers a relatively high return when done prior to the sale of a house. The trend of exterior replacements outperforming larger discretionary remodeling projects has been accelerated, no doubt, by a year in which COVID has made people reluctant to have contractors inside their homes, but yearning to improve outdoor spaces. The effect on ROI of rising material costs is shown across the board for all projects, with the ROI for all projects down an average of 3 percentage points. The wood deck project shows the greatest decrease in ROI (-10.3%) and the highest increase in material costs (+13.6%).
Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate is eligible to receive no-obligation home warranty coverage from American Home Shield or 2-10 Home Warranty the first six months the home is listed with our company?