Existing home sales fell to 5.27 million in March, down 8.5% from the 12-month high set in February of 5.76 million. While most economists expected a decline as the economic toll of the coronavirus set in, March was still a strong month. For comparison, existing home sales in March 2019 were 5.23 million as interest rates were rising and affordability was a concern among most homebuyers.
While sales are expected to decline as we hit the prime selling season in residential home real estate, prices are unlikely to follow a similar trajectory. Unlike the Great Recession, existing home inventory is currently at 1.32 million, well below the inventory in 2008, which peaked at 3.29 million in April of that year and did not fall below 2 million until 2012. The data supports this as median home prices on existing sales rose to $280,600, a 3.8% increase over the previous month.
While real estate agents continue to be innovative by leveraging virtual tours, private showings and remote closings, the headwinds facing the housing market are too great.
No matter how much home sellers adapt to social distancing, consumer sentiment, a key element to homebuying, is plummeting as the unemployment numbers continue to skyrocket. April will most certainly end with another decline in sales as the impact of Covid-19 bears its full force on the housing market.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.