Real Estate

US New Home Sales Plummet As COVID-19 Hits Housing Market

US New Home Sales Plummet Amid COVID-19

As COVID-19 started to impact the housing markets during a wind-down in mid-March, new home sales in the United States plummeted 15.4 percent. Sales of new single-family dwellings fell to a rate of 627,000 in March on a seasonally adjusted basis following a 4.6 percent sales drop in February, per the Commerce Department, the Associated Press reported.

Nationwide Senior Economist Ben Ayers said that sales activity in the months to come will face a significant impact from layoffs, as well as the closedowns required by the government. However, he noted that the forecast for the housing space should get better as the virus’ impact is reduced.

“Low mortgage rates and continued demand from the millennial generation should drive a rebound in housing activity later this year and into 2021,” Ayers predicted.

Sales dropped a steep 41.5 percent in the Northeast and were down 38.5 percent in the West. Both areas of the country had states that put stay-at-home orders into place before other parts of the nation. In the Midwest, sales dropped 8.1 percent, and in the South, they fell 0.8 percent.

In March, the median price for a new home was $321,400, which had fallen 2.6 percent from a median price in February of $330,100.

However, home sales had jumped 34 percent in January, attaining the highest level for the month as of 2012, per a John Burns Real Estate Consulting poll.

Rick Palacios, Jr., director of research for the real estate consulting company, said at the time that the rise could be attributed to job expansion, consumer confidence, a drop in mortgage rates and strength in the stock market. “We’ve never gone into a spring selling season with mortgage rates lower than they are now,” he noted.

A small slump occurred in 2019 because of borrowing cost rises, but it was previously reported that the market appeared to be rebounding from that.

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