The National Association of Realtors (NAR) is reporting that pending home sales for March 2020 was down 20.8% per their report. The results were expected as the coronavirus epidemic has stalled most economic activity since the outbreak became a national emergency. All major regions saw significant drops in pending sales.
NAR uses an index called the Pending Home Sales Index (PHSI) in order to calculate pending home sales. Pending home sales are defined as one when a contract has been signed but the transaction has not closed. The sale usually is finalized within one or two months of signing. An index of 100 is equal to the average level of contract activity 2001. That was the first year the index was used. The PHSI was down 20.8% to 88.2 in March. From the same time last year the PHSI is down 16.3%.
Lawrence Yun, chief economist for the NAR says
“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. Overall, home sales are projected to have declined 14% for the year.” Technology will assist during the crisis with 58% of realtors are reporting that buyers are using virtual tours and 43% saying buyers are taken advantage of e-closings.
Here is the breakdown regionally of the drops in PHSI:
Northeast: The Northeast saw a decrease of 14.5% to a PHSI of 82.3 for March. This is 11.0% below March 2019.
South: The South saw a dip in their PHSI of 19.5% to 103.7 in March. This is a 17.8% decrease year over year.
Midwest: The Midwest dropped 22.0% to an index of 85.6 last month. This is a drop of 12.4% from March 2019.
West: The West saw the biggest drop of 26.8% for March 2020 to 71.4. Year over year the decrease was 21.5%.
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