The National Association of Realtors said that contract signings fell significantly in March as many housing markets paused due to the coronavirus pandemic.
The new figures came in the NAR’s latest Pending Home Sales Index, which is a forward-looking indicator based on contract signings. It said the Index fell by 20.8% in March compared to the month before. All four of the major U.S. regions saw a drop in activity in the months.
Contract signings fell by 16.3% compared to March 2019.
“The housing market is temporarily grappling with the coronavirus-induced shutdown, which pulled down new listing and new contracts,” said Lawrence Yun, the 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.”
Yun said the traditional spring buying season is likely to pass us by this year due to the coronavirus pandemic. Moreover, he said that any bounce back later in the year would be unlikely to make up for the sales shortfall in the second quarter. As such, the NAR forecasts home sales to fall 14% this year.
Social distancing rules in place across much of the nation have meant that in-person home showings are no longer practical. As such, many real estate professionals have adapted the way they do business to ensure that some activity remains. Some 58% of real estate professionals told the NAR they are now offering virtual tours to buyers, while another 43% have resorted to e-closings.
The good news is that home prices have remained stable.
“Although the pandemic continues to be a major disruption in regards to the timing of home sales, home prices have been holding up well,” Yun said. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high.”
Yun said he expects the national median home price to increase 1.3% in 2020. However, he cautions there will be many local market variations. Also, the upper end of the market will likely face a reduction in home prices.