As the coronavirus pandemic has put much of society at an economic halt these past few months, a scarcity of residential real estate on the market has driven the median sales price of existing homes to an all-time high in April, according to Barron's.
The National Association of Realtors' April Existing Home Sales Report demonstrated that the median sales price had increased 7.4 percent year over year, climbing to a new historic high of $286,800 this April. National Association of Realtors Chief Economist Lawrence Yun told reporters that this all-time high is due to the growing lack of homes on the market during this time of pandemic. In April, the seasonally adjusted annual rate of existing homes dropped by 17.8 percent from March to 4.44 million, the greatest month-over-month decline observed since July 2010. Analysts and those in the real estate industry were not shocked by this, as existing home sales have waned due to the overall economic crisis inextricably linked to the global pandemic.
This sales slump and the overall lack of inventory on the market has caused the observed price gains, according to Barron's. Inventory for the trade group decreased by 1.3 percent from March to 1.47 million units at the end of April, an amount 19.7 percent lower than it was in April of last year. Yun told reporters that a burst of new listings and home construction will be necessary to restore the price growth, though the coronavirus and its consequential restrictions have slowed down this process.
However, now that many states are beginning to open economies again with looser restrictions, the housing market may be headed on the road to recovery. "What we are hearing from realtors is that they have been very busy as many governors opened up their economies," Yun said, according to Barron's. "Listings are popping up; they're showing clients those homes."
In New Orleans, the loosening of restrictions as a part of Phase 1 of the governor's plan for reopening businesses has also helped open back up the real estate market. "People are definitely not as scared as they were before, initially, so we've had more homes come on the market and more being sold," local real estate agent with Keller Williams, Sonnie Harmon, said.
Harmon has been clocking progress in the market since the start of the pandemic restrictions, with weekly market activity posts on her business Facebook page showing a recent incline in new listings, properties under contract, and properties sold. The latest update on May 22 boasts 388 new listings, 466 new contracts, and 229 sold houses in the Greater New Orleans Metro Area, a significant increase even from the week before.
As for prices, Harmon said she hasn't really seen much of an adjustment but foresees a lowering of prices if the market becomes flooded with foreclosures due to homeowners losing jobs and not being able to pay mortgage forbearances when they are due. Interest rates have fallen, however, which Harmon believes will create more of a buyer's market if the trend follows a normal pattern.
"The interest rates went back down again to the low threes with everything that's happening," Harmon said. "So, the buyers who still have jobs and can buy are still buying, and people obviously still need to sell." In other words, with the interest rates staying so low, buyers who are in the position to buy are buying right now because they are able to buy more house for the same monthly note. Historically speaking, Harmon explained, we should have been in a buyer's market already, but the pandemic has slowed that down.
Nevertheless, as the future remains uncertain, Chief Economist Yun asserts that we will not know for sure the economic impact or growth until we can see the closing figures and reports a couple months down the road.