US existing-home sales have seen their worst decline since November 2015
The drop represents weaker demand that probably is going to get much worse as the pandemic bears down on the economy.
Sales of previously owned homes dropped in March by the most since November 2015, representing weaker demand that probably is going to get much worse in the coming months as the pandemic bears down on the economy.
Contract closings declined 8.5 percent from the prior month to an annualized 5.27 million, the slowest since April 2019, from a downwardly revised 5.76 million in February, according to data the National Association of Realtors released Tuesday. The median forecast in a Bloomberg survey of economists called for a 5.25 million rate in March.
Key insights
—Business closures and stay-at-home orders that began taking effect midmonth have led to listing delays and caused buyers to postpone purchases. The market may stabilize later this year on the heels of lower borrowing costs and as Americans return to work.
“Based on what we are seeing at the moment, don’t be surprised if the sales activity could be down as much as 30 percent or even 40 percent in the next couple of months,’’ Lawrence Yun, NAR’s chief economist, said on a call with reporters.
—The median sales price increased 8 percent in March from a year earlier to $280,600. So far, selling prices are holding up even as sales decline because of a lean number of listings, Yun said.
—Available inventory was down 10.2 percent from a year earlier. At the current pace, it would take 3.4 months to sell all the homes on the market. Realtors see anything below five months of supply as a sign of a tight market.
The first half of the month “held up reasonably well, but it was the second half of March where we are seeing a measurable decline in activity,’’ Yun said. Many potential home sellers are delaying listing their properties in the current economic environment, he noted.
—Purchases dropped in all four US regions. They slumped 13.6 percent in the West, declined 9.1 percent in the South, and fell 3.1 percent in the Midwest. Northeast sales decreased 7.1 percent.
—Single-family home sales decreased 8.1 percent to 4.74 million units, also the slowest pace since April 2019.
Existing-home sales account for about 90 percent of US housing and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and will be released Thursday.
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