Pending home sales fall as expected
As a result of the coronavirus, the Pending Home Sales Index decreased 20.8 percent to 88.2 in March, with year-over-year contract signings falling 16.3 percent. For context, 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,” explains NAR’s chief economist, Lawrence Yun. “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 impact of a missed spring market
Yun explains that despite this expected uptick later in the year, home sales are still projected to fall flat for the year. “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 says. “Overall, home sales are projected to have declined 14 percent for the year.”
An industry working to adapt
NAR’s recent Flash Survey shows technology is being implemented in order to connect buyers and sellers, with 58% of Realtors® reporting buyers are using virtual tours and 43% declaring 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,” said Yun. “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 percent for the year, though there will be local market variations and the upper-end market will likely experience a reduction in home price.”
Down across the board
All four major regions saw significant declines in month-over-month contract activity and year-over-year pending home sales transactions.
March Pending Home Sales Index (PHSI):
- Northeast: Down 14.5% to 82.3—down 11% from last year
- Midwest: Down 22.0% to 85.6—down 12.4% from last year
- South: Down 19.5% to 103.7—down 17.8% from last year
- West: Down 26.8% to 71.4—down 21.5% from last year