Due to lockdowns and social distancing measures imposed in the US as a means of mitigating the spread of the coronavirus pandemic, many prospective home buyers have chosen to opt out of the previously-ownded homes market for the time being. As a result, pending home sales dropped by 21.8% in April, a record low not seen since 2010 according to the National Association of Realtors.
Although the spring time is the start of the peak home-buying season, this year has been starkly different. Compared to a year earlier, the data shows that that contract signings have fallen a total of 34.6%, this further putting into perspective the damage suffered by the housing industry. Although the economy is reflecting record-low mortgage rates, which are enticing for those in the market for purchasing a home, the majority of the demand will not return until after restrictions are lifted and states reopen.
Given the bleak outlook on job prospects in the coming months, many consumers may not feel comfortable tying up what limited income they have into a home purchase. On the other hand however, government stimulus checks may be just the thing that does get consumers out there- only the next round of data will tell.
Information for this briefing was found via Bloomberg and the National Association of Realtors. 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.
