April’s pending home sales down 21.8 percent
Due to the coronavirus, the pending home sales index dropped 21.8 percent to 69.0—marking the second straight month of declines. Overall, year-over-year contract signings fell 33.8 percent. For context, an index of 100 is equal to the level of 2001’s contract activity.
“With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases,” says Lawrence Yun, NAR’s chief economist.
April’s pending home sales mark the greatest decline since the NAR began tracking these transactions in January of 2001. Yun predicts April’s numbers will be the lowest point for pending contracts and anticipates May will be the lowest point for closed sales, hopeful that activity will begin to pick up.
Positive predictions for the months to come
“While coronavirus mitigation efforts have disrupted contract signing, the real estate industry is ‘hot’ in affordable price points with the wide prevalence of bidding wars for the limited inventory,” Yun explains. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”
NAR reports their latest Flash Survey shows signs that buyers are feeling more comfortable with recently implemented safety guidelines, with 34 percent of Realtors® reporting successfully completing nearly all aspects of transactions while adhering to social distancing procedures. New listings were up in April 2020 compared to last year in 34 metro areas.
“Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11 percent in 2020 with the median home price projected to increase by 4 percent,” Yun explains. “In the prior forecast, sales were expected to fall by 15 percent and there was no increase in home price.”
Across the regions
While the pending home sales index is down across the board, the rates of decline are lower in the Midwest, South and West compared to drops reported in March 2020.
April’s pending home sales index:
- Northeast: down 48.2% to 42.6—52.6% lower than last year
- Midwest: down 15.9% to 72.0—26.0% lower than last year
- South: down 15.4% to 87.6—29.6% lower than last year
- West: down 20.0% to 57.1—37.2% lower than last year