As the coronavirus crisis has evolved from solely a once-in-a-generation health crisis to a financial one as well, many folks have wondered what it will mean specifically for America’s housing market.
In the past few weeks, the number of homes for sale on realtor.com® has plummeted by nearly half as sellers are pulling them off the market or holding off on listing their abodes. And as nonessential businesses remain shuttered and unemployment soars, reaching 22 million jobless claims in just four weeks, home price growth is also beginning to slow.
Home prices were up just 0.8% year over year in the week ending April 11. That was compared with a 1.6% annual rise in the week ending April 4, a 2.5% bump in the week ending March 28, and a 3.3% increase in the prior week.
“Demand is already evaporating and, with that, prices will absolutely decline,” says George Ratiu, senior economist for realtor.com®. “And we’re beginning to see that decline.”
The slower price growth is a marked contrast to the first two weeks of March, before the stay-at-home orders began in earnest around the country. Median list prices were going up about 4.4% annually on average during those weeks.
Near record-low mortgage interest rates are also likely to bring the costs of purchasing a home down as well. They were just 3.3% for 30-year fixed-rate loans for the week ending April 16, according to Freddie Mac.
But even the most motivated buyers aren’t likely to find a home easily. The number of realtor.com listings plummeted 47% year over year in the week ending April 11, according to realtor.com data. That’s a dramatic drop considering the number of new listings on realtor.com were rising by about 5% in the first two weeks of March, before the COVID-19 crisis erupted on U.S. soil.
Many sellers are taking their homes off the market or delaying listing them as they don’t want to lose out on fetching top-dollar for their properties or move during a worldwide pandemic.
“Sellers are recognizing the economic downturn is already a lot deeper than expected,” says Ratiu.