The coronavirus pandemic has dealt builders of new homes a hefty blow.
The number of newly constructed homes sold and for sale fell by a steep 15.4% in March compared with the previous month, according to the seasonally adjusted numbers in the most recent report from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
That’s an unsettling swift slide as the stay-at-home orders and astronomical unemployment filings didn’t begin until toward the latter half of March.
New-home sales were also down 9.5% in March compared with the same month a year ago, as buyers closed on just 627,000 new homes.
Sales were particularly down in the parts of the country that have been hardest-hit by COVID-19. Monthly sales were down 41.5% in the Northeast and 38.5% in the West in March. These are the areas that were quickest to institute stay-at-home orders and close down nonessential businesses.
And sales numbers are likely to continue to drop until the public health crisis is under control.
“The drop in March sales reflects buyer concerns over the virus,” Robert Dietz, the chief economist of the National Association of Home Builders, said in a statement. “The weakening in sales is in line with our builder surveys that showed dramatic declines in buyer traffic and builder confidence in April. We expect further slowing of the pace of new home sales in April, as jobless claims continue to rise.”
Prices of new homes also fell, dipping to a median $321,4000—a 2.6% decline from February. However, they were up nearly 3.5% from March 2019.
“Buyers still in the market for a home might take a fresh look at new homes in the months ahead, especially if new-home prices soften,” realtor.com Chief Economist Danielle Hale said in a statement.
The number of existing-home sales met a milder fate. Sales of the previously lived-in homes were down 8.5% from February to March, but up 0.8% year over year, according to the National Association of Realtors®’ most recent report.
And median prices were up in March, to $280,600—an 8% annual rise.
Building experts expect that sales will rebound once the crisis is contained, Americans can safely go back to work, and the economy has improved.
“While we expect to see some further impacts to the industry, we remain confident that housing will be a sector that will help lead the economic recovery,” Shrewsbury, NJ–based builder and NAHB chairman Dean Mon said in a statement.