March Pending Sales Plunge 20.8%; NAR Calls It Temporary

By Kerry Smith, Florida Realtors

The usual spring home-selling season took a hit due to the pandemic, but most experts consider it a bump in the road rather than a long-term change.

WASHINGTON – Pending home sales fell 20.8% in March – expected declines as a result of the coronavirus outbreak, according to the National Association of Realtors® (NAR).

The drop was widespread, and each of the four major regions tracked by the index saw drops in month-over-month contract activity and year-over-year pending home sales transactions.

The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – decreased 20.8% to 88.2 in March. Year-over-year, contract signings declined too though not as much at 16.3%. An index of 100 is equal to the level of contract activity in 2001.

“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,” Yun says. “Overall, home sales are projected to have declined 14% for the year.

“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 adds. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high. I project the national median home price to increase 1.3% for the year, though there will be local market variations and the upper-end market will likely experience a reduction in home price.”

March pending home sales regional breakdown

The Northeast 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, and it’s 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.

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