US Home Sales Post Biggest Monthly Decline Since 2015 Amid Pandemic

US home sales fell sharply last month as the lockdowns to contain the coronavirus pandemic were implemented, according to industry data released Tuesday.

Sales of existing houses, townhomes and apartments dropped 8.5 percent compared to February -- the biggest single month decline since 2015 -- falling to a seasonally-adjusted annual rate of 5.27 million, according to the National Association of Realtors, which said more declines are likely in coming months.

The data are based on completed home purchases that are weeks in the making, so it is possible some sales were simply delayed, but the amount that were cancelled is on the rise, in part reflecting growing job losses which could hurt sales in coming months.

"More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise," NAR chief economist Lawrence Yun said in a statement.

Sales fell nationwide but the dropoff was most pronounced in the West where home sales plunged 13.6 percent, while in the South the decline was 9.1 percent, NAR said.

Home prices continued to rise, however, increasing to a median of $280,600, NAR said, which is eight percent higher than a year ago.

Ian Shepherdson of Pantheon Macroeconomics warns that "April will be much worse" since it will reflect more widespread lockdowns in a key sector for the US economy, and rising unemployment will have a major impact.

"We remain hopeful that many transactions have been deferred rather than cancelled -- homes usually aren't impulse purchases -- but the pool of potential buyers has shrunk as jobs have evaporated," he said in an analysis of the data.

Weekly data on unemployment benefits show 22 million jobs have been purged from the US economy, at least temporarily, during the first month of pandemic, compared to 8.7 million lost in the two years following the 2008 global financial crisis.

And job losses already are showing up in home sales data. In a survey released Friday, NAR said eight percent of the sales contracts in the January-March period were terminated -- double the rate of the prior quarter.

Of the sales that were abandoned the coronavirus appeared to be a major factor: 22 percent were due to "buyer lost job" (compared to just one percent in February), and 47 percent were due to "Other" reasons (from 24 percent in February 2020) which were mostly related to the coronavirus, NAR said.

And Yun said the pandemic may cause fewer sellers to list their homes "which will limit buyer choices."

The report Tuesday showed the supply of housing on the market -- which has been dwindling for months -- increased to 3.4 months from 3.0 months in February, which could be expected to help tamp down prices.

NAR noted an increase in virtual home tours and e-signings, as realtors adapt to the limitations imposed by efforts to contain the virus.

Nancy Vanden Houten of Oxford Economics projects a 10 percent drop in existing home sales in the April-June quarter.

"We look for a modest recovery in the second half of 2020," she said.

However, that rebound "could be constrained if employment recovers more slowly than we expect or if mortgage lenders tighten their standards in the aftermath of the pandemic."