As the novel coronavirus continues to spread across the United States, its impact on housing markets is becoming increasingly apparent. According to a new report from the National Association of Realtors, pending home sales dropped to a record low in March, as buyers and sellers opted to stay away from real estate transactions amid the pandemic.
The report showed that pending home sales in March 2020 fell by 16.3 percent compared to the same month a year earlier, the largest monthly drop since record-keeping began in 2001.
Remarkably, the decline was even sharper than during the housing crisis of 2007-08, when pending home sales dropped a total of 10.7 percent. Realtors have noted that the coronavirus-induced plunge has been more extreme due to the quickness and severity of its occurrence.
In addition, the report indicated that the West region was hit the hardest, with pending home sales spiraling down by 41 percent compared to a year ago. While new home listings fell the most in the West, listings also dropped significantly in the Northeast (27 percent), Midwest (25 percent) and South (15 percent).
The data offers a sobering outlook on the housing market, which could have long-term implications on real estate values. While the job market and the broader economy have seen significant stresses in recent weeks, this data indicates that the housing market, in particular, is feeling the strain.
Though realtors are hopeful that the restrictions in place to mitigate the pandemic’s spread will eventually be lifted, the near-term outlook for the housing market is bleak. Realtors are preparing for a much gloomier spring-buying season than originally expected.
The drop in pending home sales could also have a ripple effect on the economy. If the recent trend continues, it could mean job losses in the housing market – from contractors to realtors – which could subsequently cut into demand in other industries as well.
Nevertheless, the future of the housing market ultimately hinges on the speed and effectiveness of the federal response to the economic effects of the coronavirus, as well as the ability of the broader economic to recover in a post-crisis world. For now, all eyes are on the data to get an indication of how the housing market is faring.
