–NAR’s Yun Sees Continued Disruptions, Lower Inventories, Higher Prices
By Kevin Kastner
WASHINGTON (MaceNews) – U.S. home resales slowed dramatically in March, falling by 8.5% to a 5.27 million annual rate after a February gain, the slowest pace since April 2019 and below the 5.40 million rate expected.
The current month’s data still reflect some contract signings before the full social distancing impact of the COVID virus, so the current month’s decline is only the beginning of a downhill slide as foot traffic dried up.
Realtors turned to online showings to replace in-person open houses, which allowed some sales to proceed with concessions to social distancing. However, the desire and ability to sign home sales contracts in the wake of layoffs and business closings was likely diminished for many prospective buyers.
“Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” National Association of Home Builder Chief Economist Lawrence Yun said, adding that “(m)ore temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
Inventories of homes for sales rose by 2.7% in March, lifting the month’s supply to 3.4 months from 3.0 months in February. Inventory was still down more than 10% from its level a year ago.
New home supply is likely to decline in the coming months, based on home construction data released last week. The impact of fewer new homes to trade up to, combined with an increased desire by current homeowners to remain where they are, if possible, until the crisis is over will depress homes available for resale.
Prices rose solidly in March and were up sharply from a year earlier. NAR noted that despite social distancing, the market remained very fast, with more than half the homes sold on the market for less than a month, supporting prices for the moment.
In other data released earlier on Tuesday, the Philadelphia nonmanufacturing index plunged to a record low -96.4 in April after falling to a reading of -35.1 in March. Only 1.8% of survey respondents saw improving conditions, compared with 98.2% who saw declines.
Readings for employment, new orders, and sales declined sharply, while inventories moved slightly higher due to reduced demand.
Just as concerning, the six-month outlook fell further into contraction, with most respondents seeing declines continuing into the fall. This contrasts with the six-month outlook for the manufacturing data in that region which suggested conditions will be improved by then.
Additional nonmanufacturing conditions data will be released on Thursday from Markit and the Kansas City Federal Reserve.
—
Contact this reporter: kevin@macenews.com