With unemployment numbers in the millions due to economic lockdowns across the entire country and stay-at-home orders imposed as a measure to mitigate the spread of the coronavirus, many Americans have seen a sudden decline in their income. As a result, new home sales have plummeted across the US.
Prior to the implementation of lockdown measures, the housing market was on a positive path from the help of low mortgage rates. However, that has now changed, and the sale of new single family homes have dropped by 15.4% in March, which has thus far been the largest decline since July 2013. The new rate is the result of a drop from 741,000 units sold in February to only 627,000 units sold for the month of March.
Although the US government has introduced macroeconomic measures to mitigate an economic recession via near-zero interest rates and stimulus checks to the working class, it is still not enough to upkeep the housing market. Nonetheless, the demand for new and previously-owned homes has declined, and as as result economists are predicting home values to drop in 2020.
The new homes that did get sold in March were in price range of $200,000 and $749,000, meanwhile homes below $200,000 were the most in demand, accounting for 10% of the sales. Meanwhile, the number of homes on the market available for purchase have increased by 9,000 – up from 324,000 units in February.
Information for this briefing was found via Reuters and Commerce Department. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.