U.S. home sales tumble as coronavirus keeps buyers indoors

U.S. home sales dropped by the most in nearly 4-1/2 years in March as extraordinary measures to control the spread of the novel coronavirus brought buyer traffic to a virtual standstill, with realtors and economists expecting a further deterioration in housing market activity through the second quarter.

The slump in home resales reported by the National Association of Realtors (NAR) on Tuesday added to a pile of dismal March reports in illustrating the economic havoc from the coronavirus outbreak, which has thrown millions out of work.

“The virus could have prevented some transactions from being completed late in the month,” said Daniel Silver, an economist at JPMorgan in New York. “Given a range of indicators showing that activity in the housing market fell as the virus spread intensified, we think the existing home sales data likely will deteriorate further in upcoming reports.”

Existing home sales tumbled 8.5% to a seasonally adjusted annual rate of 5.27 million units last month. The percentage decline was the largest since November 2015. The data reflected contracts signed in February or even January, before measures to curb the spread of the virus paralyzed the economy.

The NAR said it expected a steeper decline in sales in April and in the few months thereafter, derailing the normally busy spring selling season. Sales fell in all four regions last month. Economists polled by Reuters had forecast existing home sales would tumble 8.1% to a rate of 5.30 million units in March. Existing home sales, which make up about 90% of U.S. home sales, rose 0.8% on a year-on-year basis in March.

States and local governments have issued “stay-at-home” or “shelter-in-place” orders affecting more than 90% of Americans to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, and abruptly halting economic activity. At least 22 million people have filed for unemployment benefits since March 21.

The housing market was back on the recovery path, thanks to low mortgage rates, before the lockdown measures. It had hit a soft patch starting in the first quarter of 2018 through the second quarter of 2019.

While extraordinary steps by the Federal Reserve to cushion the economy’s free fall, including aggressively cutting interest rates to near zero, will keep mortgage rates low, which is unlikely to boost the housing market because of record unemployment and faltering consumer confidence.

U.S. stocks were trading lower following a historic crash in U.S. crude prices to below zero on Monday and gloomy quarterly forecasts from some companies. The dollar rose slightly against a basket of currencies, while U.S. Treasury prices were mostly trading higher.