“Plunging Home Sales: Lower Than Ever, Even Worse Than the Financial Crisis

Pending Home Sales Drop to Record Low in the US The US housing market has taken a sharp nosedive recently, as pending home sales have dropped to a record low—even lower than during the financial crisis. The National Association of Realtor’s (NAR) Pending Home Sales Index (PHSI) for March plummeted by 21.8%, which is the largest monthly decrease since records were first kept in 2001. The index is based on signed contracts, which is an indication of future home sales. The past three months have been particularly tough on the housing market, with the index showing a 39.5% decline in the span of three months. April’s figures, which are yet to be released, are expected to be even worse. The Chief Economist of NAR, Lawrence Yun, has criticised the federal government’s lack of support for the housing industry during this time saying, “It was necessary to provide mortgage forbearance and deferral, along with eviction protection for renters, but homebuyers should have received financial assistance, as well.” The state of Florida was particularly hard hit with a staggering decline of 32.4%. California followed close behind with a drop of 28%. The Northeast was not far behind; with a decrease of 26%. These drops are especially concerning since these three states have the highest levels of pending home sales. The decline in pending home sales is indicative of the uncertain economic future and the financial hardships suffered by many in the US. NAR President, Vince Malta, believes that the industry’s priority now must be safeguarding against a prolonged downturn. He believes that the government needs to step up and offer more economic relief to people affected by the pandemic, and that housing will be an important engine to get the economy back on its feet. He asserted, “NAR is advocating for a comprehensive housing stimulus package, including temporary yet meaningful property tax relief and unemployment insurance extensions to keep struggling homeowners and rental households in their homes.” It is clear that the US housing market is in trouble, and drastic measures need to be taken in order to help it recover. With the government’s help, the industry may just be able to get back on its feet.