“A Record Low Home Sales Plummet—Bummer or Blessing?

It’s been a difficult year for the real estate market. After several months of record-high home sales, the latest numbers from the National Association of Realtors show a dramatic plunge. Pending home sales dropped 18.8% in May, the lowest since records began in 2001 and a further decline from the 6.2% drop in April. The decrease in sales indicates a worrisome trend in the housing market, especially when compared to the 4.9% decline in pending home sales recorded during the financial crisis of 2008. Although this comes as no surprise considering the economic impact of the ongoing coronavirus pandemic, it is still a worrying sign for those looking to buy or sell a house. The pandemic has wreaked havoc on the real estate market in several ways. Firstly, restrictions on movement have made it difficult for people to physically view potential homes and engage with agents. Secondly, layoffs and other economic uncertainties have made it difficult for potential homeowners to secure mortgages. On top of all this, potential buyers and sellers are now much more cautious about entering into the real estate market. All these factors have coalesced to make the decline in pending home sales particularly drastic. Fortunately, the drop in pending home sales is not a sign of a housing market crash. For one thing, none of the signs indicating such a market crash were present before the coronavirus pandemic, such as overbuilding. Furthermore, the country’s economy has been gradually recovering since the pandemic began, so the low pending home sales may just be a temporary dip in the market. With the improving economy, many industry experts are cautiously optimistic that the housing market will eventually recover. Home loans are becoming more available and interest rates have been steadily dropping. In addition, the Federal Reserve’s emergency lending program has provided a much-needed boost to real estate markets, which should help facilitate more sales and help prices to rise again. Although the decline in pending home sales is a worrying sign, it’s important to remember that this is a temporary setback that is likely to be reversed soon. If people remain cautious and continue to take the necessary safety precautions, the real estate market should be able to make a full recovery in the near future.