The economic ripple effect of the COVID-19 coronavirus pandemic is starting to spread. And the next victim looks to be the housing industry’s seller’s market.
March home sales fell 8.5%, according to the National Association of Realtors. And the months ahead will likely be notably worse, according to the group’s chief economist.
While sales were down compared to February 2020, they still managed to top March 2019 (though by a mere 0.8%). The figure could be easily misunderstood, though, as the sales figures are based on closings that were signed mostly in late January or February.
That means figures in upcoming months will drop precipitously as the effects of stay-at-home orders and a huge surge in unemployment begin to factor in.
“Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” said Lawrence Yun, NAR’s chief economist, in a statement. “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
For now, at least, home prices aren’t suffering. The median existing home price in March was up 8% from a year prior to $280,600—the 97th consecutive month of year-over-year gains.
A potential stumbling block for the industry is a growing lack of inventory. People are taking their house off the market now or choosing not to list, perhaps to avoid potential exposure to the virus. At the end of March, there were 10.2% fewer houses on the market.
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