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As the coronavirus courses through the now decelerated U.S. economy, the real estate industry finally has official data to confirm what many experts had already anticipated: home sales have slowed down.
According to the National Association of Realtors, while year-over-year sales are up nearly 1%, the seasonally adjusted annual rate of existing home transactions dropped 8.5% from February to 5.27 million in March.
“Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” the NAR’s Chief Economist Lawrence Yun said in a press statement. “More temporary interruptions to home sales should be expected in the next couple of months.”
On the heels of historic slumps in both homebuilder sentiment and construction levels, sales of new abodes are not looking any better, either. According to Meyers Research, new home sales dipped by 33.1% from February to March, while the company’s new home pending sales index decreased 23.9% from the same time in 2019.
“March is historically a better month than February for new home sales but COVID-19 turned that trend on its head, in part because of record-breaking job losses,” said Ali Wolf, chief economist at Meyers Research. “Uncertainty and fear are powerful forces.”
Despite the currently slow activity in the real estate market, which is prompting sellers to pull out listings in a time of the year that would have otherwise charted a busy home buying season, prices remain unscathed. According to the NAR, at $280,600, the median existing home price in March stood 8% higher than a year ago, marking 97 straight months of annual gains. The U.S. Census Bureau is to release March median sale prices for new homes later this week.
Prices have stayed high throughout the COVID-19 pandemic as mortgage rates have maintained record low levels (3.45% in March, according to Freddie Mac) and inventory has been tight (10.2% lower in March year-over-year).
“Earlier in the year, we watched inventory gradually tick upward but with the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices,” Yun said. “Significantly more listings are needed and more will come on to the market once the economy steadily reopens.”
At the same time, 52% of the residences that changes hands in March had spent less than a month on the market, where first-time buyers made for 34% of shoppers and where virtual tools kept transactions moving along.
Some of the most active metros for home sales in March, according to the NAR, were in smaller cities, including Colorado Springs, Colo., Modesto, Calif., Rochester, New York, Manchester-Nashua, N.H. and Lafayette-West Lafayette, Ind.