April Existing Home Sales Continue Skid—But ‘Green Shoots’ Appear
Existing home sales plunged in April, the National Association of Realtors reported yesterday, continuing a two-month skid in sales brought on by the coronavirus pandemic to the lowest level in nearly 10 years.
NAR said total existing-home sales (https://www.nar.realtor/existing-home-sales) fell by 17.8% from March to a seasonally adjusted annual rate of 4.33 million in April. Sales decreased year-over-year as well, down 17.2% from a year ago (5.23 million). April sales are the lowest level since July 2010 (3.45 million) and the largest month-over-month drop since July 2010 (-22.5%).
The report said single-family home sales fell to a seasonally adjusted annual rate of 3.94 million in April, down by 16.9% from 4.74 million in March and down by 15.5% from a year ago. The median existing single-family home price rose to $288,700 in April, up 7.3% from a year ago. Existing condominium and co-op sales fell to a seasonally adjusted annual rate of 390,000 units in April, down 26.4% from March and down 31.6% from a year ago. The median existing condo price rose to $267,200 in April, an increase of 7.1% from a year ago.
“There appears to be a shift in preference for single-family homes over condominium dwellings,” said NAR Chief Economist Lawrence Yun. “This trend could be long-lasting as remote work and larger housing needs will become widely prevalent even after we emerge from this pandemic.”
Regionally, sales fell across the board. Median home prices in each region grew from one year ago, with the Northeast and Midwest regions showing the strongest price gains.
Sales in the South fell by 17.9% in April to an annual rate of 1.88 million and fell by 16.8% from a year ago. The median price in the South rose to $249,400, a 6.4% increase from a year ago. Sales in the West fell by 25% to an annual rate of 810,000 in April and fell by 27% from a year ago. The median price in the West rose to $419,300, up 6.1% from a year ago.
Sales in the Northeast fell by16.9% to 540,000, an 18.2% decrease from a year ago. The median price in the Northeast rose to $312,500, up 8.7% from a year ago. In the Midwest, sales fell by 12 percent to an annual rate of 1.10 million and fell by 8.3% from a year ago. The median price in the Midwest rose to $229,200, a 9.3% increase from a year ago.
“Existing-home sales plunged in April because of COVID-19 social distancing and closures, with this morning’s release showing an 18 percent drop in the seasonally adjusted, annualized pace of home sales,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “The non-seasonally adjusted total was down 18 percent from a year ago – the largest decline since late 2010. After starting the year at an annualized sales pace of 5.5 million units, sales fell to a 4.3 million pace – the slowest since 2011.”
Kan said April’s bleak data highlight both sellers pulling their listings off the market, and buyers delaying purchase decisions during these challenging economic times. “With many states around the country now gradually reopening, the five-week rebound in purchase applications reported in MBA’s Weekly Applications Survey may be an indicator that April is the low point for home sales,” he said. “Activity may start to stabilize and move upward over the next few months.”
Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said COVID-19 crisis is presenting a major challenge for buyers and sellers. “However, we expect to see improvements soon now that many areas have begun to reopen,” he said.
Vitner said the double-digit drop in April existing home sales was largely expected, as social distancing and stay-at-home orders were in effect for most of March and April. “Widespread restrictions to contain the spread of the pandemic have been challenging for both buyers and sellers,” he said. “Virtual tours and digital signings have been useful stop-gap measures. They were clearly not enough to avoid a sharp pullback in buying activity and new listings.”
Vitner added the coronavirus crisis is also hitting the housing market at what is usually the height of the spring buying season. “Unfortunately, a full rebound in activity is unlikely given the widespread uncertainty stemming from the crisis,” he said. “While most areas of the country have now reopened, it will be a slow and gradual recovery. More optimistically, there are green shoots suggesting the housing market will help lead the recovery.”
Yun said the economic lockdowns – occurring from mid-March through April in most states – have temporarily disrupted home sales “But the listings that are on the market are still attracting buyers and boosting home prices,” he said.
Other report data:
–The median existing-home price for all housing types in April rose to $286,800, up 7.4% from a year ago ($267,000), as prices increased in every region. April’s national price increase marks 98 straight months of year-over-year gains.
–Housing inventory at the end of April totaled 1.47 million units, down 1.3% from March and down 19.7% from a year ago (1.83 million). Unsold inventory sits at a 4.1-month supply at the current sales pace, up from 3.4-months in March and down from the 4.2-month figure recorded in April 2019.
–Properties typically remained on the market for 27 days in April, seasonally down from 29 days in March, but up from 24 days a year ago. Fifty-six percent of homes sold in April were on the market for less than a month.
–First-time buyers represented 36% of sales in April, up from 34% in March and 32% a year ago. The NAR 2019 Profile of Home Buyers and Sellers said the annual share of first-time buyers was 33%.
–Individual investors or second-home buyers purchased 10% of homes in April, down from 13% in March and from 16% a year ago. All-cash sales accounted for 15% of transactions in April, down from 19% in March and 20% a year ago.
–Distressed sales represented 3% of sales in April, about even with both March and a year ago.