Existing home sales plunged 17.8% in March, the biggest drop since July 2010, as deals fell through in the midst of the worst public health crisis in more than a century.
Sales fell to a seasonally adjusted 4.33 million annual pace, the slowest rate in a year and almost a million short of the previous month, the National Association of Realtors said in a report on Tuesday. The median price rose 7.4% to $286,800 after gaining in all areas of the country, according to NAR Chief Economist Lawrence Yun.
Sales were down 17.2% compared to this time a year ago, he said.
The economic lockdown temporarily disrupted home sales beginning mid-March through April, Yun said. But the listings that are currently on the market are still attracting buyers and boosting home prices, he said.
“Record-low mortgage rates are likely to remain in place for the rest of the year, and will be the key factor driving housing demand as state economies steadily reopen,” Yun said.
The coronavirus pandemic put more than 39 million Americans on the unemployment rolls in the past nine weeks. The death toll has risen to more than 93,000, according to data from Johns Hopkins University.
Low mortgage rates might not be enough to overcome tighter credit standards, job losses and a shortage of homes on the market, Capital Economics, an economic research firm, said in a statement.
“Despite a strong recovery in mortgage applications for home purchase, we doubt sales will bounce back over the next two to three months,” Capital Economics said. “Tighter credit conditions, record low inventory and record-high unemployment all argue against a quick return to normal.”
April typically sees an increase in inventory within the spring homebuying season. However, this year saw a 19.7% drop from a year ago, NAR said. The 1.47 million home for sale at the end of April was the lowest ever recorded for the month, according to NAR.