Pain from the Pandemic: Home Sales Have Been Declining

HOUSTON – (By Dale King, Realty News Report) – The Coronavirus Pandemic, as expected, has deprived the American population of jobs, wages, traditional education modes, dining opportunities, sports events and nearly all forms of entertainment.

The global malaise has also kicked the stuffing out of the home sales markets, nationally and in Houston, where realty associations report serious declines in recent dwelling purchases.

Still, some light is beginning to appear at the end of the long, dark tunnel, say Realtors in Texas and across the country. But the road to normalcy is subject to change without notice.

The latest report from the National Association of Realtors says the sales of existing homes fell in May, marking a three-month decline caused by the COVID-19 outbreak. All four major regions of the US witnessed dips in month-over-month and year-over-year sales, with the Northeast taking the biggest month-over-month hit.

NAR Economist Lawrence Yun
NAR Economist Lawrence Yun

The median existing-home price for all housing types, nationally, in May was $284,600, up 2.3% from May 2019 ($278,200), as prices increased in every region. May’s national price increase marks 99 straight months of year-over-year gains, said NAR chief economist Lawrence Yun.

Total national housing inventory at the end of May totaled 1.55 million units, up 6.2% from April, and down 18.8% from one year ago (1.91 million). Unsold inventory sits at a 4.8-month supply at the current sales pace, up from 4.0 months in April and up from the 4.3-month figure recorded in May 2019.

“New home construction needs to robustly ramp up in order to meet rising housing demand,” Yun said. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”

Yun, decked his comments with silver linings. “Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” he commented. “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”

Houston Association of Realtors reports that home sales fell for a second straight month in May as the impact of the virus and related stay-at-home orders took their toll.

“May delivered another mixed bag of data for the Houston housing market, given the ongoing coronavirus pandemic on top of strains in the oil patch and the broader recession,” said HAR Chairman John Nugent with RE/MAX Space Center.

“We will eventually work our way through these challenges, and already there are positive indicators in the form of strong rental activity, solid pending sales numbers and steady attendance at property showings across greater Houston,” he said. “Historically low interest rates also make conditions appealing to would-be buyers.”

Around the Bayou City, he said, growing consumer interest in personal rather than virtual open houses and property showings, as well as an increase in offers to purchase demonstrated improving market conditions.

In Houston, the HAR found, homes in every price category suffered losses, with the steepest declines at the low and high ends of the market. Homes priced below $100,000 dropped more than 37% while those priced above $750,000 plunged more than 56%. Year-to-date sales are now running 4.3% behind 2019’s record pace.

The latest market update from the HAR says 6,671 single-family homes sold in May compared to 8,359 a year earlier. That translated to a 20.2% decline – the second monthly drop since the pandemic struck. The lower sales volume, particularly among high-end homes, took a toll on average sales price numbers as well. However, strong demand in the mid-priced market kept the median price of homes statistically flat, said the Houston-based association.

National sales for May decreased in every region of the US, said the NAR. Median home prices grew in three of the four major regions compared to a year ago, and fell marginally in the West.

The national Realtors’ group offered the following bullet points:

  • May 2020 existing-home sales in the Northeast fell 13.0%, racking up 470,000 sold residences, a 29.9% decrease from a year ago. The median price in the Northeast was $327,900, up 7.8% from May 2019.
  • Existing-home sales decreased 10.0% in the Midwest to an annual rate of 990,000 in May, down 20.2% from a year ago. The median price in the Midwest was $227,400, a 3.0% increase from May 2019.
  • Existing-home sales in the South dropped 8.0% to an annual rate of 1.73 million in May, down 25.1% from the same time one year ago. The median price in the South was $247,400, a 2.1% increase from a year ago.
  • Existing-home sales in the West fell 11.1% to an annual rate of 720,000 in May, a 35.1% decline from a year ago. The median price in the West was $408,400, down 0.2% from May 2019.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.23% in May, down from 3.31% in April. The average commitment rate across all of 2019 was 3.94%.

NAR President Vince Malta, broker at California-based Malta & Co., dosed his comments with lots of optimism.

“Although the real estate industry faced some very challenging circumstances over the last several months, we’re seeing signs of improvement and growth, and I’m hopeful the worst is behind us,” Malta said.

June 24, 2020 Realty News Report Copyright 2020

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