The National Association of Realtors said on Tuesday that its pending home sales index fell 12.8% in April to 81.3, the lowest level since its inception in 2001 and down from a sharply-revised 94.4 in March. The figure marks a 33.4% drop from the same time last year.
This decrease is another negative sign for the housing market, showing that it was not immune to the economic crisis caused by the coronavirus pandemic. It is especially alarming since this indicator is usually seen as a good barometer for the health of the housing sector.
The last time pending home sales fell below this level was in 2008, during the financial crisis. The decline is indicative of a possible collapse of the housing market, as it typically takes months for a sale to close. This means that home buyers have significantly fewer options than before, which could further contribute to the market’s downturn.
The only silver lining is that the current decrease in pending sales appears to be more of a response to current circumstances, such as stay-at-home orders, rather than a result of Americans’ decrease in purchasing power. However, it is still too early to evaluate the full impact of the pandemic on the housing market.
