Research by realtor.com revealed both the long-term and short-term impact that the spread of COVID-19 has had on the housing market.
The immediate impact—in the next three to six months—will be the slowdown of open housing, with many of those moving to virtual tours. Impact over the next six to 18 months could be lower buyer and seller sentiment, disruptions to housing supply, and more declines in affordability.
Estimates from realtor.com, in a sample of counties across six of the largest states, predicts COVID-19 will impact sales volume in the second half of March.
In the 10 weeks prior to the virus and through the week of March 8, sales in the sample area were up 15% annually. However, for the weeks ending March 15 and March 22, sales were down 2.7% and 2.8%, respectively, year-over-year.
An early reading of stats for the week ending on March 29 showed home sales were down 30% year-over-year. The report adds homes that if preliminary numbers hold, the sample area could see home sales drop 5% to 10% annually in March.
Additionally, a recent survey by the Mortgage Bankers Association reported mortgage purchase applications were down 11% for the week ending March 27—a year-over-year drop of 24%.
Realtor.com data shows that in the first two weeks of March pre-COVID, new listings grew 5% annually, on average. However, for the weeks ending March 29 and April 5, the volume of newly-listed properties fell by 34% and 31%, respectively—the biggest declines of the year.
The average list prices in the first two weeks of March pre-COVID grew 4.4% annually. Homes prices, though, grew 2.5% and 1.6% annually for the weeks of March 29 and April 5. Realtor.com reports the average home-price growth of 1.6% is the slowest pace of growth since 2013.
“While still short of foreshadowing price declines, the slower gains could be indicative of early market response to economic uncertainty and restrictions to industry activity, along with lower buyer and seller sentiment. If continued, this could mark the start of further deceleration in asking price growth in April,” the report stated.