Pending single-family home sales fell by nearly 21 percent in March compared to February as the economic impact of COVID-19 took its toll on the real estate sector, according to the National Association of Realtors (NAR).
“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, in a statement.
The slide began in February, when home sales fell by 16 percent compared to the same month one year ago.
Slower sales coincide with the lowest mortgage ever recorded, according to the Mortgage Bankers Association. The average rate on 30-year fixed mortgages fell to a 3.43 percent last week.
Signed contracts to purchase existing homes, referred to by agents as pending home sales, had the biggest fall in the West, where they were off by 21 percent compared to a year ago.
Sales in the South have slipped 18 percent annually. In the Northeast, pending sales were 11 percent lower than a year ago, and in the Midwest, sales decreased by 12 percent.
Brokers say home sales have suffered due to lack of inventory, but the economic climate amid the coronavirus has caused some sellers to remove their listings.
“The housing market is temporarily grappling with the coronavirus-induced shutdown, which pulled down new listings and new contracts,” Yun said. “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.”
Yun predicts total home sales for 2020 will be 14 percent lower annually. But he does not expect lower home prices. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out again in 2020 to a new record high,” he added.
Yun predicted the national median home price will increase 1.3 percent for the year, with some local market variations and more weakness among luxury sales.