Existing home sales tumbled 8.5% in March, the biggest drop in more than four years, as deals fell through in the midst of the worst public health crisis in more than a century.
Sales fell to a seasonally adjusted 5.27 million at an annual pace, the slowest rate in a year, the National Association of Realtors said in a report on Tuesday. The median price rose 8% to $280,600 after gaining in all areas of the country, according to NAR Chief Economist Lawrence Yun.
Even with the drop, sales remained 0.8% higher than the year-ago month, he said.
The housing market has grappled for a year with a shortage of homes for sale that supported price growth as buyers competed over limited supply, Yun said. When the pandemic hit the U.S., it made that shortage even worse, he said.
“With the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices,” Yun said. “Significantly more listings are needed and more will come on to the market once the economy steadily reopens.”
Another sign of high demand is how quickly homes transacted, he said. Properties were on the market for an average of 29 days in March, down from 36 days a year ago. Fifty-two percent of homes sold last month were on the market for less than a month, Yun said.
The coronavirus pandemic that has caused more than 42,000 deaths in the U.S. and shut down the economy in mid-March, putting more than 22 million Americans on the unemployment rolls in the last four weeks.
Even as some states begin reopening, home sales are expected to decline in the coming months as people wait to list homes or make offers until the worst of the pandemic has passed, Yun said.
“More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise,” he said.