- Home purchases expected to drop most in four years.
- Sales in the largest category were at 13 year high in March.
- US GDP forecast to contract sharply in the first quarter.
American home sales which had soared in February reflecting the excellent labor market of the past three years should reverse sharply in March as the Coronavirus closures kept buyer and sellers socially distant in the second half of the month
Sales of existing homes, about 90% of the US housing market, are forecast to drop 8.1% which would be the largest one month decline since November 2015. The annualized selling rate in February of 5.77 million units was the highest in 13 years and a 6.5% increase from January’s 5.42 million. On the year sales were up 7.2% in February
Unemployment hits housing
The US economy has been hammered by extensive government ordered business shutdowns and social restrictions in the second half of the month and the layoff of 22 million workers in the past four weeks.
Initial jobless claims
Housing ownership is a barometer of consumers’ long term economic view. For most US individuals and families it is their largest lifetime purchase and the most common financing is a 30-year mortgage.
The number of people willing to take on the commitment of buying a house has been rising steadily since dropping to a three year low of 4.93 million annually in January 2019. Job security, rising wages and the lowest unemployment in half-a-century had finally repaired a housing market that had suffered its largest bubble and collapse a decade earlier.
Information from the real estate brokerage Redfin showed a nearly 150% jump year over year in listed home being taken off the market in the last week of March. Housing inventory was already weak, down 10% on the year in February with an average supply dropping to 3.1 months from 3.6%.
US GDP to decline in Q1
The decline in US economic growth in March is predicted to have been steep enough to push the entire quarter into contraction despite having been expanding at an estimated 2.7% rate in late March by the Atlanta Fed’s GDPNow model.
Estimates for annualized GDP in the first three months of the year are -4% in the Reuters survey of economists and -0.3% from the Atlanta Fed on April 16, with an update due on the April 24.
If the economy does contract it would be the first negative quarter since the start of 2015 and only the third negative since the end of the financial crisis recession in June 2009. The Bureau of Economic Analysis will issue its preliminary estimate on Wednesday April 29, followed by two revisions at one month intervals.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.