By JOSH BOAK AP Economics Writer
BALTIMORE (AP) — U.S. home sales showed signs of collapsing in March, as the number of contract signs plunged sharply because of the coronavirus outbreak.
The National Association of Realtors said Wednesday that its pending home sales index, which measures signed buyer contracts, plummeted a seasonally adjusted 20.8% in March from the prior month to a reading of 88.2. That is the lowest level since May 2011, when the housing market was still dealing with foreclosures and crashing prices from the Great Recession. Pending sales have fallen 16.3% from a year ago.
The economic shutdown resulting from COVID-19 has hit real estate hard. Sales listings were already tumbling, but would-be buyers are now also coping with a rattled stock market and an uncertain job outlook as 26 million people have filed for unemployment aid in the past five weeks. Still, the Realtors expect sales to begin recovering once the outbreak subsides because mortgage rates have been historically low.
“The housing market is temporarily grappling with the coronavirus-induced shutdown, which pulled down new listings and new contracts,” said Lawrence Yun, NAR’s chief economist. “As consumers become more accustomed to social distancing protocols, and with the economy slowly and safely reopening, listings and buying activity will resume, especially given the record low mortgage rates.”
“The usual spring buying season will be missed, however, so a bounce-back later in the year will be insufficient to make up for the loss of sales in the second quarter,” he said. “Overall, home sales are projected to have declined 14% for the year.”
Housing had been looking up before the virus spread. The Census Bureau said Tuesday that the home ownership rate climbed during the first three months of this year to 65.3%, up from 64.2% a year earlier. The share of people under 35 owning homes has jumped to 37.3% from 35.4% a year ago, though they have been less likely than prior generations to own a home.
The Northeast Pending Home Sales Index (PHSI) dropped 14.5% to 82.3 in March, 11.0% lower than a year ago. In the Midwest, the index decreased 22.0% to 85.6 last month, down 12.4% from March 2019.
Pending home sales in the South sank 19.5% to an index of 103.7 in March, a 17.8% drop from March 2019. The index in the West fell 26.8% in March 2020 to 71.4, down 21.5% from a year ago.