Economic News

Sales of Existing Homes Fall to Near 10-Year Low

During these interesting times, are you in the market for a house? If not, you certainly aren’t alone. As CNN Business reports (and according to data from the National Association of Realtors), sales of existing homes dropped by 17.8% in April compared to the previous month. Similarly sales were down 17.2% year over year. This was not only the largest monthly drop seen since July of 2010 but also brought sales down to their lowest point since that same month.

Also dropping in April were housing inventories. At the month’s end there were 1.47 million units available, marking a 20% decline from last year. In turn, the median sale price during the month rose to $286,800 — a 7% year over year increase. This lengthened the market’s streak to 98 consecutive months of YOY gains, with every region of the country seeing rising prices.

It’s easy to guess at the main reason for the steep decline in sales: near nationwide shelter-in-place orders that were in effect through much of the month. As the National Association of Realtors’ chief economist Lawrence Yun explained, “The economic lockdowns — occurring from mid-March through April in most states — have temporarily disrupted home sales. But the listings that are on the market are still attracting buyers and boosting home prices.” Of course financial factors could also be playing a role, with Joel Kan of the Mortgage Banker’s Association noting, “April’s bleak data highlight both sellers pulling their listings off the market, and buyers delaying purchase decisions during these challenging economic times.” However Kan retained a somewhat optimistic outlook, adding, “Activity may start to stabilize and move upward over the next few months.”

News of falling home sales comes as a growing number of owners are requesting forbearance, allowing them to halt mortgage payments. According to the Mortgage Bankers Association, 8.16% of all mortgages were in forbearance as of May 10th. While this might not directly impact sales, it does add another layer to the housing markets evolving reality.

Given the circumstances, a major drop in home sales for April was to be expected. In fact subsequent down months seem all but certain. Yet, as Kan suggested, there does seem to be hope that things can rebound a bit later in the year. However that’s also dependent on the economic situation the U.S. finds itself in once fears of the coronavirus subside, with it currently being unclear how many “temporary” job losses become permanent. Thus, the housing market is yet another unknown in our increasingly confusing world.