Home sales could fall as much as 60% this spring and could take more than a year to recover, according to a new forecast by Zillow.
The forecast calls for a 2-3% drop in prices through the end of the year, followed by a steady recovery throughout 2021. Zillow says home prices could recover at a pace of about 10% each month through 2021.
"Much uncertainty still exists, particularly with some states beginning to reopen and experts warning of a possible second wave of the coronavirus in the fall. However, housing fundamentals are strong -- much more so than they were leading into the Great Recession—and that bodes well for housing in general," said Dr. Svenja Gudell, Zillow's Chief Economist. "Despite the difficulties, we're seeing several signs that there is still a good amount of demand for housing, and buyers, sellers, and agents are growing more comfortable moving transactions forward where possible. For those who need to sell, buyers are out there, and there are ways to embrace technology and practice social distancing to ensure a safe process."
Zillow Chief Economist Svenja Gudell said that technology is helping move transactions forward, and its 3D home tours have increased by 600%.
The report also said the buyer demand will prevent U.S. home prices from dropping more than 2-3%—or more than 1.7% annually.
A recent report by Redfin found homebuying demand fell 15% for the week ending on April 26, which is an increase from the 34% drop in March.
New listings were up from their low point on April 13, but there are fewer than 70,000 homes for sale in Redfin markets—a five-year low.
Redfin reports that 53,000 new homes hit the market for the week ending on April 24, which is a slight increase from the 48,000 added for the week ending on April 13. Pending home sales were up slightly to more than 32,500 for the week ending on April 24 from the 31,000 on April 13.
Home prices, however, have been steady, as the median list price for the week ending on April 24 was $308,000—a year-over-year increase of 1%.