A new survey from the National Association of Realtors (NAR) has confirmed that buyers are staying away from the market due to the ongoing coronavirus pandemic, though realtors are optimistic that they will return.
Fifty-nine percent of realtors polled in the Economic Pulse Flash Survey, which returned 5,855 responses from April 5-6, reported that buyers are delaying their home purchases for at least a couple of months. Ninety percent said buyer interest has declined, with 45% indicating that interest has declined by more than 50%.
Meanwhile, 13% of survey respondents reported that buyers are continuing the process of purchasing homes, though only through virtual communication. Thirteen percent also reported that clients are deciding not to buy or sell indefinitely.
Eight percent of respondents indicated no change in buyer activity, while a scant 2% actually reported an activity increase.
On the supply side, 80% of realtors responding to the survey observed a decline in the number of homes on the market. Fourteen percent indicated that the decline of seller activity has been by more than 50%.
NAR’s data affirms observations and forecasts of the market cooling, with the economy feeling major negative impacts and most people unable or unwilling to fully undertake the homebuying process thanks to COVID-19 prevention measures.
“It’s not really a shock that we’re seeing these numbers,” said Gay Cororaton, senior economist and director of housing and commercial research at NAR. “I’m not shocked that [a large number of] our realtors are saying that they’re seeing a 50% decline in buyer interest. You can’t go out. You can’t search for a property.
“But frankly, part of it is because we’ve already been shocked in a sense, right?” Cororaton continued. “The unemployment numbers [that came out early in the outbreak] were huge also. That was a thing we kind of anticipated once we found out restaurants would be closing, but the numbers came and it was almost like a jolt. What we’re seeing now is the numbers following our expectations a little bit now that we’re further in it a little more.”
Notably for the mortgage industry, of the 93% of respondents who reported that the majority of their business is residential, 34% reported no closing delays due to the pandemic. The biggest reason for delays, however, has been issues financing, with 31% of residential respondents reporting a lending-related hold-up. Other delays in the transaction process have come from appraisals (25%), home inspections (21%) and final walk-throughs (17%).
As far as home prices go, 37% of residential respondents said that home buyers aren’t expecting lower prices because of the COVID-19 outbreak. The rest reported that buyers expect lower prices as they sense less competition, with the highest share (23%) observing that buyers expect between 5-10% savings. Still, sellers so far don’t seem to have responded; 72% of residential participants — almost three in four — said that sellers haven’t reduced prices to attract buyers.
Lawrence Yun, NAR’s chief economist, doesn’t see prices dwindling too much.
“Home prices will remain stable because of a pandemic-induced reduction in inventory coupled with less immediate concerns over foreclosures,” he said.
And like many realtors, Yun is hopeful that the market will re-heat once the pandemic is in the rearview.
“Home sales will decline this spring season because of unique economic and social consequences resulting from the coronavirus outbreak,” he said, “but much of the activity looks to reappear later in the year.”