The economic impact of the Coronavirus will spill over into the home market, with sales expected to decline by 15% this year.
This is the latest estimate provided by the Federal National Mortgage Association, known throughout the U.S. as Fannie Mae.
New Report Suggests a Slow Year for Existing Home Sales
Fannie Mae made the prediction in its latest housing report. Its forecast is based on historical data and mortgage data from the previous month.
According to the government-sponsored enterprise, most of the decline will come from the existing home market. 4.54 million existing homes are expected to be sold this year, compared to 5.34 million in 2019.
The rise in unemployment will contribute to a lack of demand. Lockdown orders will also have an impact, with people being unlikely to move within their own communities, or across to new cities and states.
The home market was in a strong position at the end of 2019. It was expected to grow this year. Now home sellers are removing their listings from the market. In the report, Fannie Mae Chief Economist Doug Duncan said that “On the supply side, the number of listings is falling, as those with homes to offer may either be hesitant to allow strangers to tour their home or worry that the lack of demand is placing downward pressure on the sales price.”
This leaves buyers and sellers in a difficult position. Buyers may be less likely to explore the market, especially when facing economic uncertainty. Low inventory will also be a challenge.
House Prices Still Likely to Increase
There was some reassurance offered to buyers in the report. It suggested that sellers who wait could still see gains when listing later in the year or early in 2021.
The median price for an existing home is expected to increase to $275,000 this year, compared to $272,000 at the end of 2019.
The Coronavirus is the most significant economic challenge faced since the 2008 recession. Its damage is already beginning to eclipse that event. However, buyers and sellers willing to wait out the current conditions are likely to find a healthy market on the other side of the pandemic.
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