As Pending Sales Fall Sharply, NAR Says Housing Market Slump will be Temporary
Real Estate In-Depth | April 29, 2020
WASHINGTON—Pending home sales fell in March as a result of the Coronavirus outbreak, according to the National Association of Realtors. Each of the four major regions saw drops in month-over-month contract activity and year-over-year pending home sales transactions, NAR reported on April 29.
The Pending Home Sales Index in the month of March in the Northeast fell nearly 15%, according to the NAR report.
The PHSI decreased 20.8% to 88.2 in March. Year-over-year, contract signings declined 16.3%. An index of 100 is equal to the level of contract activity in 2001.
“The housing market is temporarily grappling with the Coronavirus-induced shutdown, which pulled down new listings and new contracts,” said Lawrence Yun, NAR’s chief economist. “As consumers become more accustomed to social distancing protocols, and with the economy slowly and safely reopening, listings and buying activity will resume, especially given the record low mortgage rates.”
“The usual spring buying season will be missed, however, so a bounce-back later in the year will be insufficient to make up for the loss of sales in the second quarter,” he said. “Overall, home sales are projected to have declined 14% for the year.”
Citing results from NAR’s April 19 – 20 Flash Survey, Yun says technology tools such as virtual tours and e-signings are helping connect buyers and sellers. Fifty-eight percent of Realtors reported that buyers are using virtual tours and 43% said buyers have taken advantage of e-closings.
“Although the pandemic continues to be a major disruption in regards to the timing of home sales, home prices have been holding up well,” Yun said. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high. I project the national median home price to increase 1.3% for the year, though there will be local market variations and the upper-end market will likely experience a reduction in home price.”
March Pending Home Sales Regional Breakdown
The Northeast PHSI dropped 14.5% to 82.3 in March, 11.0% lower than a year ago. In the Midwest, the index decreased 22.0% to 85.6 last month, down 12.4% from March 2019.
Pending home sales in the South sank 19.5% to an index of 103.7 in March, a 17.8%-drop from March 2019. The index in the West fell 26.8% in March 2020 to 71.4, down 21.5% from a year ago.