MNI DATA REACT: US March Home Sales Hit Slowest Pace in a Year

--Pace Expected to Deteriorate Further

By Brooke Migdon

     WASHINGTON (MNI) - Sales of existing homes retreated in March, falling by

-8.5% to the slowest sales pace in a year just one month after climbing to the

highest monthly sales pace since 2007, according to data released Tuesday by the

National Association of Realtors.

     The sales pace should deteriorate further as long as emergency measures to

slow the spread of COVID-19 remain in place, NAR chief economist Lawrence Yun

told reporters Tuesday on a conference call.

     U.S. existing home sales slowed to a 5.27 million annualized pace in March,

slightly higher than market expectations for a 5.25 million pace as the novel

coronavirus outbreak continues to drive both buyers and sellers away from from

realtors' offices. Sales were up 0.8% from one year ago, boosted by near

record-low mortgage rates that were markedly lower than those of last year's

spring buying season. 

     However, March data reflected contracts signed during the latter half of

February, before the coronavirus outbreak in the U.S. prompted state lockdowns

and social distancing guidelines, and Yun said monthly sales could fall by 30%

to 40% over the next couple of months. These steep declines are expected to be

temporary and could rebound quickly once the economy reopens, he said. 

     --PRICES STILL ELEVATED

     Even as sales activity plummets, there is no indication that prices will be

falling anytime soon, Yun said.

     "There is no panic among home sellers," he said. "We are anticipating a

sharp decline in activity for the next couple of months, but prices will stay

steady."

     Yun said a nationwide inventory shortage will continue to push up prices

even as the pandemic worsens market conditions and tools like virtual tours and

virtual signatures should keep the housing market moving, though many buyers

have indicated they will postpone buying for at least a couple of months.

     At the current sales rate, it would take just 3.4 months to exhaust the

existing homes inventory, down from 3.8 months one year ago.

     The national median home price rose 8.0% from a year ago in March to

$280,600, the highest since June. Yun said realtors surveyed by NAR indicated

that "whatever is listed is not lingering in the market" and potential sellers

are hesitant to list their homes in the current environment, feeding the

inventory shortage that is driving prices higher.

     Regionally, month-over-month sales declined in every major region, falling

by -13.6% in the West, -9.1% in the South, -7.1% in the Northeast, and -3.1% in

the Midwest.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

[TOPICS: MAUDS$,M$U$$$,MT$$$$]