The recent COVID-19 pandemic has affected all aspects of the economy. Most of this impact can be seen on the news through stories about unemployment numbers, GDP estimates, and stock market volatility. But what impact has the pandemic had on residential real estate?
If we look at the numbers, are fewer homes being sold? Are prices declining? Some of the results might surprise you. Let’s get an update on the figures, both across the U.S. and closer to home in the Hoosier State, focusing on one popular housing metric: existing-home sales.
What are Existing-Home Sales?
Existing-home sales account for more than 90% of total home sales in the U.S. These are based on closing transactions for single-family homes, townhomes, condominiums, and co-ops. Newly constructed homes are not included. The data is released monthly by the National Association of Realtors (NAR) and broken down by region – Northeast, Midwest, South, and West.
Existing-Home Sales in the U.S. – Going Down!
The number of existing homes being sold in the U.S. on a seasonally adjusted basis has declined since February 2020 as the stay-at-home orders around the country have kept people indoors. The most recent data released in April 2020 shows a month-over-month decline of -17.8%. This is the largest month-over-month drop since July 2010 (-22.5%). Sales in April were also down about -17.2% from one year ago (i.e. April 2019).
To put this into perspective, information from the NAR over the last 12 months (ending April 2020) shows that the average seasonally adjusted annual rate of homes sold per month was about 5.3 million. In February 2020, there were about 5.8 million homes sold, which was 500,000 above the average!
In March 2020, when economies started shutting down, 5.3 million homes sold, followed by 4.3 million homes in April 2020. As you can see, the pandemic decreased home sales in April by nearly 20%.
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