An index of contract signings for purchases of previously owned U.S. homes slumped to a record low in April as coronavirus lockdowns thwarted prospective buyers.
Pending home sales decreased 21.8 per cent to a level of 69, the lowest in records back to 2001, after falling 20.8 per cent in March, according to National Association of Realtors data Thursday. The monthly decline was the largest since May 2010 and compared with the median forecast in a Bloomberg survey for a 17.3-per-cent drop. Contract signings plummeted 34.6 per cent from a year earlier on an unadjusted basis.
Residential real estate over the past two months, associated with the start of the peak selling season, has suffered from efforts to contain the coronavirus pandemic. At the same time, near record-low mortgage rates are showing signs of rekindling demand, according to separate data on home-purchase applications.
“While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is ‘hot’ in affordable price points with the wide prevalence of bidding wars for the limited inventory,” Lawrence Yun, NAR’s chief economist, said in a statement. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”
Pending home sales dropped sharply from a month earlier in all four U.S. regions, including a 20-per-cent decline in the West and a 15.4-per-cent slide in the South.