Key Highlights
- Pending home sales or signed contracts to buy existing homes plummeted -20.8% in March, according to National Association of REALTORS® (NAR)
- Compared to one year ago, pending home sales slid -16.3%
- Mortgage Bankers Association (MBA indicated average rate on 30-year fixed mortgage hit low of 3.43% during third week of March 2020
According to the National Association of REALTORS® (NAR), pending home sales plummeted -20.8% in March and -16.3% annually.
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Regionally, pending home sales or signed contracts for existing homes looked like this:
- Northeast
- -14.5% monthly
- -11% annually
- Midwest
- -22% monthly
- -12.4% annually
- South
- -19.5% weekly
- -17.8% annually
- West
- -26.8% weekly
- -21.5% annually
Supply of existing homes for sale, already suffering during January and February of 2020, dropped to a record low in March due to sellers either delisting their properties or getting cold feet and not listing their homes as they thought they would.
Lawrence Yun, NAR’s chief economist, said, “The housing market is temporarily grappling with the coronavirus-induced shutdown, which pulled down new listings and new contracts.” Yun, however, concluded his remarks with an upbeat message. “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 Mortgage Bankers Association (MBA) pointed to a record low 3.43% average interest rate on a 30-year fixed mortgage but just because interest rates are low, essentially making homes cheaper, getting a mortgages now is most definitely harder. Many lenders have tightened their underwriting standards and increased qualifying minimum credit scores.
Joel Kan, MBA’s associate vice president of economic and industry forecasting said, “The 10 largest states (by normal application volume) had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring home buying season, as coronavirus lockdown restrictions slowly ease in various markets.”
Despite this less than cheery news concerning pending home sales, a key indicator of the housing market’s temperature, Yun, NAR’s chief economist, believes that home prices will remain unscathed in light of his -14% projection of 2020 total home sales. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high….” with a projected increase of +1.3% as a national median home price for the year aside from fluctuations here and there in local market variations and upper-end-of-the-market weaknesses.
Thanks to CNBC’s Diana Olick.
Also read: Who Are the Power Players in Real Estate in 2020?, Banks Earned $10B in Fees for Handling Small Business Loan Program, March Home Sales Dropped -8.5% – More Than Expected
