The Pending Homes Sales Index (PHSI), a forward-looking sales indicator based on contract signings was down 21.8 percent in April and year-over-year contract signings fell 33.8 percent.
“With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases,” NAR Chief Economist Lawrence Yun said in a statement.
It’s the largest decrease since NAR began tracking contract signings in January 2001, but Yun believes the industry has already hit a low point. The month of May will be the lowest point for closed sales.
“While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is ‘hot’ in affordable price points with the wide prevalence of bidding wars for the limited inventory,” Yun said. “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”
Data from real estate brokerage firms backed up the idea that the real estate market may have hit the bottom point and is on the upswing. Last week, both Compass CEO Robert Reffkin and Coldwell Banker CEO Ryan Gorman made similar suggestions in separate appearances on CNBC.
Last week, the National Association of Realtors gave its first look at just how badly the COVID-19 pandemic impacted home sales in April. Existing-home sales were down 17.8 percent month-over-month and 17.2 percent year-over-year in April 2020, according to NAR’s existing-home sales report, released May 21.
And even as the forward-looking indicators may seem grim, hitting the biggest decline ever, the overall outlook for the market going forward isn’t as ugly as the headline makes it seem.
“Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11 percent in 2020 with the median home price projected to increase by 4 percent,” Yun said. “In the prior forecast, sales were expected to fall by 15% and there was no increase in home price.”