“Record Low Pending Home Sales: Even Worse Than Before the Financial Crisis!

Even with some states beginning to re-open amid the ongoing pandemic, pending home sales have dropped to a record low due to the stare-at-home orders. According to the National Association of Realtors (NAR), an index tracking the number of contracts to purchase homes dropped to record low in April, to levels lower than even during the 2005-2006 financial crisis period. The decline in home sales amid the coronavirus pandemic can be attributed to the grim economic situation of the country, combined with the numerous restrictions, like travel bans and stay-at-home orders, imposed by each state. Due to the uncertain financial environment, potential home buyers are not able to make the required purchase decisions and are thus postponing the process. The financial crisis in 2008 saw a drop of over 40 percent from March to April in terms of pending home sales. In comparison, this April saw a drop of over 31 percent from last month. The data further highlights the sharp down-turn in the housing market due to the pandemic. However, economists remain cautiously optimistic and suggest that the market will start reviving with the easing of restrictions around the country. This may push forward potential homebuyers to resume their processes of purchasing the homes. A revival isn’t expected in the short-term, but more data will help provide a better outlook. The pandemic has undoubtedly put a roadblock on the housing market, but there is still hope for a rebound as more states start to move out of their stay-at-home orders and travel bans. New home purchase contracts can move forward as we remain cautiously optimistic of the future of the market.