The economic crisis, coronavirus pandemic, lockdowns, and record-high unemployment have severely affected the real estate market. Existing home sales, which make up about 90% of all U.S. home sales, plunged 17.8% month-on-month in April, an equivalent of 17.2% slump year-on-year, according to the National Association of Realtors. The percentage decline was the largest since July 2010. The annualized figure of 4.33 million units represents the slowest sales rate since September 2011.
The numbers are based on closed sales of contracts signed in late February and March. The April drop in closings is the largest one-month decline since July 2010, during the subprime mortgage crisis when the homebuyer tax credit expired. Lawrence Yun, chief economist for the National Association of Realtors, was quoted by CNBC as saying:
Certainly with the lock-down occurring from mid-March, and given the shakiness from the stock market in February, that hurt pending contracts, so now we are seeing an almost 20% decline in existing homes sales.
In addition, the supply of homes for sale fell 19.7% annually in April to 1.47 million units. Noting that this is “the lowest April inventory figure ever,” the news outlet conveyed, “Not only did potential sellers decide not to list their homes, as job losses mounted and the economy shut down, but some sellers already on the market pulled their listings.”
The inventory drop pushed home prices to a new nominal high. The median price of an existing home sold in April rose 7.4% from a year earlier to $286,800. “Price appreciation in the 7% range is unhealthy,” Yun explained, adding that the only way for the price growth to slow down is to “get more listings and also more home construction.”