The housing market has been hit hard by the coronavirus pandemic and its attendant restrictions. Pending home sales – the number of residential sales transactions whose contracts have been signed but not yet closed – have declined drastically over the past few months, and the latest data shows that they have reached a record low.
According to statistics released by the National Association of Realtors, pending home sales across the US dropped by 20.8% in April 2020, compared to the same time last year. This marks the sharpest decline since 2002, and is even worse than during the 2008 housing market downturn caused by the financial crisis.
The restrictions on movement and social gatherings that have been put in place to contain the virus have had a negative impact on the real estate market. As people have been unable to meet and sign documents or meet in person, the number of real estate transactions have decreased.
In addition, potential buyers have been reluctant to enter into contracts due to job insecurity and economic uncertainty. Furthermore, the decrease in mortgage interest rates has not been able to offset this overall hesitation from potential buyers, even though it makes mortgages more affordable.
The long-term impact of these declines in home sales is yet to be seen, and it is difficult to predict when the market will rebound. However, it is clear that the housing market is one of the areas that has been most affected by the pandemic, and is likely to take some time to recover.