Home sales drop almost 18% in April

The housing market has once again been hit hard by coronavirus; probably the worst yet, since the 2001 housing crisis.

According to the National Association of Realtors, in the month of April, sales of existing homes fell 17.8% month-to-month, 17.2% lower a year ago, seasonally adjusted. Putting the annualized sales at 4.33 million units, the slowest since September 2011.

The numbers provided are based on closed sales and not signed contracts. Therefore, they represent contracts signed between late February and March. Since July 2010 when the homebuyer tax credit expired, the April drop in closings has since become the largest one-month decline.

At the end of April, the supply of homes for sale fell 19.7% annually to 1.47 million units for sale, making it the lowest April inventory figure ever. This happened as a result of existing sellers pulling down their market listings and potential sellers refusing to list their homes. Amid the coronavirus pandemic and a slowed-down economy, many home sellers would rather not take the risk of listing.

The drop in inventory figures has driven the process to a new high record. As a result of this, the median price of an existing home rose to 7.4% annually to $286,800, in April.

Buyers have also been reluctant to buy homes as the Mortgage rates were not favorable enough. In March, mortgage tightened due to the coronavirus mortgage forbearance programs set up by the government which allows homeowners to delay payments over a period of time. The implication of the move was that it became more difficult for buyers to get the amount of financing they require to buy a home.

The chief economist for realtors Lawrence Yun said the lockdown from mid-March and “shakiness” form the stock market three months ago has caused an “almost 20% decline in existing home sales.”

“April activity will be down, but what we are hearing from Realtors is they are getting busy as governors are opening the economy.”

In April, home selling mostly moved online as there were still a few buyers interested in the market. Buyers have access to virtual tours and live showings given by real estate agents over the internet. A few sales were closed using this method as some agents reported selling homes to buyers online.

Single-family homes sales fell 16.9% while condo sales dropped 26.4% for the month. According to Yun, “this could be a short-term shock from the use of common rooms or elevators in condos, or it could be a long-term trend of people wanting to buy away from the cities and in the suburbs.”

Hopefully, the housing market will pick up soon enough. There are already signs indicating the market’s recovery. Last week, mortgage applications to purchase homes were down 1.5% compared to a year ago, according to Mortgage Bankers Association.