As the coronavirus crisis continues to unfold around the world, one economic indicator of a potential housing market downturn has already started to become apparent – pending home sales. According to the National Association of Realtors (NAR), pending home sales – contracts that have been signed but are still waiting to close – have dropped to a record low in April of this year, even lower than during the financial crisis of 2007-08.
The pandemic has caused a dramatic decrease in consumer confidence, as well as an economic recession. This, along with the continued cancellation of open houses and physical showings due to social distancing practices, has significantly limited the number of potential buyers. At the same time, with unemployment numbers rising, buyers are having difficulty getting the financing they need for new home purchases.
The data from the NAR doesn’t provide any real insight into how long this slump in pending home sales is likely to continue. However, some optimistic industry analysts point out that this decline may mark the bottom of the market for this cycle. Once unemployment numbers improve, and consumer confidence is restored, they anticipate that home buyers will start to come back in greater numbers.
The current decline in pending home sales is certainly a troubling sign for the housing market. It remains to be seen how long this slump will last and what the long-term outlook for the market will be. In the meantime, home sellers will want to adjust their expectations and consider ways to market their homes digitally, in order to take advantage of the opportunities that this uncertain market provides.