New home listings dropped 44.1 percent in April, typically one of the busiest months in the real estate industry, according to data from Realtor.com. The decrease in home listings highlights seller decisions to halt sales and see how market conditions play out as stay-at-home orders have led 30 million Americans to lose their jobs.
"The good momentum we saw at the start of the year has helped to somewhat insulate the housing market from the coronavirus' negative impact on buyer and seller confidence across the U.S.," Reator.com Chief Economist Danielle Hale said in a statement reported by Fox News. "Although we saw sharp drops in new listings, an increase in the time it takes to sell a home and a flattening of prices in April, May is likely to see some of these metrics worsen."
Hale added that the impact on the housing market "will depend on how effective the country is at containing the virus and how the economy responds. If the economy experiences a positive reboot, sellers could see buyers returning to the market aggressively this summer to make up for the spring they lost."
How the virus is affecting the real estate market: Interest rates. The Federal Open Market Committee issued an emergency interest rate reduction on March 3 in an effort to bolster the economy. With benchmark interest rates lowered to just 1-1.25 percent, buyers who were on the fence about purchasing could see that now is a great time to lock in their mortgage rate. Lowered interest rates may also help buyers afford a more expensive home or take advantage of the increased affordability while interest rates are down.
Refinancing Another positive note in real estate is that the mortgage industry is currently experiencing a refinancing boom as rates hit an all-time low. Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni explains in a report by MBA.org that “given the further drop in Treasury rates, we expect refinance activity will increase even more until fears subside and rates stabilize.”
Inventory Inventory is becoming tighter as listings are delayed and buyers and sellers are wary of making contact with strangers. Chief Economist and Senior Vice President of Research for NAR Lawrence Yun suggests that, in the short term, “home sales will be chopped by around 10 percent, compared to what would have been the case, due to the spread of coronavirus.”