Google searches for “homes for sale” could drop 63% by the end of May, signaling a slowdown in the housing market, according to a new study by LendingTree.
At the beginning of the year, low mortgage rates and strong home sales data seemed to indicate a housing market poised for growth. In January, the number of new homes sold in the US hit its highest level since 2007.
“Things look a lot different today as the coronavirus outbreak has plunged economic markets into turmoil and the economy slows,” said Tendayi Kapfidze, LendingTree chief economist. “As a result, Americans are changing their spending habits and tightening their financial belts, with many putting home shopping on the back burner.”
Kapfidze said that one way to gauge homebuyer interest was by measuring internet searches, since most homebuyers begin the process online. LendingTree analyzed Google search data to see how popular the term “homes for sale” was in the 50 largest metro areas in the US. Google measures search popularity on a scale of zero to 100, with 100 meaning the search is at peak popularity.
LendingTree found that the number of people searching for “homes for sale” grew from 2019 to early 2020 – but interest in the search term has fallen off significantly over the last few weeks as COVID-19 has spread. The company also projected what the search’s popularity may be in the weeks to come.
“It is difficult to predict how the virus will continue to impact the economy and consumer behavior; however, if the decline in homebuying search interest persists, the average search-interest value across these 50 metros could drop from an average of 90.3 at its peak this year to 32.5 by the end of May,” Kapfidze said. “Ultimately, this could be an indicator of a significant slowdown in home sales.”
Searches for “homes for sale” have declined across all 50 metro areas studied by LendingTree. The average decline was 32% from each metro’s 2020 peak value, LendingTree said.
Tucson, Ariz., Columbus, Ohio, and San Diego posted the largest drops in search interest, according to LendingTree. The average decline in those metro areas was 45% from their peak 2020 values. Charlotte, N.C., Raleigh, N.C., and Austin, Texas, posted the smallest decline, with the popularity of the search term falling only 19%% from its 2020 peak.
Kapfidze said the trend will likely continue if the COVID-19 outbreak remains a threat – and could be a harbinger of ill tidings for the housing market as a whole.
“If the impact of COVID-19 remains substantial over the next two months, then searches could fall an average of 635 across all metros from their 2019 values,” Kapfidze said. “This will result in an average search-interest value of 32.5, and likely signify a large decline in home sales across the 50 metros LendingTree analyzed.”