US existing home sales slumped the most since 2015 last month as coronavirus eroded demand
Americans are holding back on buying homes as the coronavirus pandemic rages on.
Sales of previously owned homes fell 8.5% in March to a seasonally adjusted annual rate of 5.27 million following a strong February, the National Association of Realtors said Tuesday. It’s the largest month-over-month drop since November 2015.
Economists surveyed by Bloomberg expected a 5.25 million rate in March.
The coronavirus pandemic has hit the housing market during what is typically a busy season, the NAR data suggested.
“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.”
There could be worse to come. Existing home sales are a lagging indicator because they are measured at the point of closing, which is typically one to two months after a contract is signed. In the US, lockdowns to curb the spread of COVID-19 began in mid-March, meaning that the impact of a slowdown is limited in the monthly report.
April’s report should show a much greater hit, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“We remain hopeful that many transactions have been deferred rather than canceled – homes usually aren’t impulse purchases – but the pool of potential buyers has shrunk as jobs have evaporated,” Shepherdson told Business Insider. “Housing is not the hardest-hit part of the economy, but it is being hammered nonetheless, at least for now.”
Despite the monthly decline, existing home sales increased on the year for the ninth straight month, according to NAR data. In addition, home prices remain strong — the median-existing home price jumped 8% from March 2019, the 97th straight month of gains.
Still, existing home sales decreased in every US region in March, led by regions hit earliest by the coronavirus outbreak. Existing home sales in the Northeast declined 7.1% on the month, while sales in the West dropped 13.6% at the same time.