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MReport June 2020

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52 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Available Housing Supply Shrinking Potential home sales fall more than 5% month over month. F irst American Financial Corporations' Potential Home Sales Model found potential existing-home sales fell to a seasonally-adjusted 4.68 million. This fall translates to a 5.1% month-over-month decline. This statistic is 39.4% higher than the market potential low point that was seen in the month of February in 1993. Likewise, when compared to just one year ago, April's statistics for market poten- tial regarding existing-home experi- enced a fall of 12.6%, signifying a loss of roughly seasonally adjusted 670,000 sales. As of today's market, the poten- tial existing-home sales is around 2 million. This statistic is actually 30.4% less than the recession's peak that was reported in March 2004. First American Chief Economist Mark Fleming commented on how he sees the coronavirus affect- ing the market: "The coronavirus pandemic continued its historic assault on the domestic and global economy in April, and the hous- ing market did not go unscathed. Typically, the hot spring home- buying season would be in full swing in April, but pandemic- related impacts, including shelter- in-place orders, the rapid surge in unemployment, and declining consumer confidence chilled a promising spring for the housing market." Fleming then added details to paint a vivid picture of the pan- demic's aftermath: "Our Potential Home Sales Model reflects the significant impact of the pan- demic on the market potential for existing-home sales, which fell to the lowest level since August 2012. Housing market potential decreased 5.1% in April relative to the previous month, and fell 12.6% year over year, a decline of 672,230 (SAAR) potential existing-home sales." He continued his explanation: "Credit tightening remained the largest drag on housing market potential for the second month in a row. However, rising tenure length is a growing headwind for housing market potential as well, as potential sellers keep their homes off the market during this period of uncertainty." A report by Redfin states that homes for sale in April fell 22.5% annually. Also declining were the share of new homes for sales (-42.4%) and the number of homes available for sales (-24.5%). Home prices were up from the year prior, but the rate of growth in the U.S. median home-sale price fell slightly to 4.9% annually. This is down from 6.9% in March. The average sale price in April was $303,895. "Typically, the hot spring home-buying season would be in full swing in April, but pandemic-related impacts, including shelter-in-place orders, the rapid surge in unemployment, and declining consumer confidence chilled a promising spring for the housing market." — Mark Fleming, Chief Economist, First American

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