• Sales of existing homes decline 8.5% in March, more than forecast.
  • Fresh evidence of severe US economic slowdown.
  • Sales rate drops to 11 month low at 5.27 million units.

Sales in the largest sector of the housing market fell more than expected in March sliding 8.5% to 5.27 million annualized units, according to the National Association of Realtors (NAR) on Tuesday.

 Even though the figures are based on closing for contracts largely signed in January and February before many state government closed businesses because of the Coronavirus it was the largest monthly decline in four years. Typically there is a one or two month delay between the contract and the actual transfer of the property at the closing while the buyer secures mortgage financing.

Existing home sales


Mortgage rates

February had seen a 6.3% spike in sales to 5.77 million, the best level in 13 years as customers were emboldened by the buoyant job market to take advantage of falling interest rates in what for most is their largest lifetime purchase.  

”Mortgage rates will be at super low conditions this year,” noted NAR chief economist Lawrence Yun.

Interest rates on a conventional 30-year fixed-rate mortgage averaged 3.45% nationwide in March, down from 3.47% in February and 3.62% in January. In 2019 the average was 3.94%.

Sales were up 0.8% from a year earlier (5.23 million in March 2019), rising for the ninth straight month. January’s is normally the slowest month of the year in the real estate market and the sales increase to February is historically the largest each year.

While the March sales numbers were within the range of the past four years Yun suggested that sales could fall 30% or 40% in the months ahead as the widespread economic shutdown of the commercial and retail sectors has thrown more than 22 million people out of work.

If accurate this would, at least temporarily bring sales back to the lowest point of the post-recession housing crash in July 2010 at 3.83 million units. .

US GDP headed to contraction

The housing market could be another sign that the jobs losses incurred by the business closures are affecting consumers’ long-term outlook.  

March’s economic closures even though limited to the last two weeks of the month are expected to have been severe enough to push the entire quarter into contraction despite the estimated 2.7% rate in late March in the Atlanta Fed’s GDPNow model. 

The first quarter GDP rate is predicted to be -4% annualized in the Reuters survey of economists and was at -0.3% from the Atlanta Fed on April 16, with an update due on the April 24.  The US economy expanded at a 2.1% rate in the final three months of 2019.

This 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 for Q1 GDP on Wednesday April 29, followed by two revisions at one month intervals.

Regional housing sales

Sales fell across the country in March led by the West down 13.6%, to 9.1% in the South, 7.1% in the Northeast and 3.1% in the South.

Price growth remained strong rising 8% on the year supported by a shortage of inventory, off 10.2%  last month from a year earlier. The median home price in March was $280,600.

“There was a housing shortage going into the virus,” said Yun, “Builders have been underproducing for ten years.”

Some gauges of availability showed a steep drop in the number of new listing in March which probably reflects the social distancing measures prevalent in much of the country. The NAR reported that 93% of sellers had changed their behavior to accommodate new social distancing restrictions most often offering virtual tours of properties instead of personal visits. 


While the home resale market is not a major contributor to GDP it is an indicator of the health and confidence of the consumer sector which is the dominant force in US economic activity.  If the decline in home sales persists and accelerates it will bode ill for consumption in the general economy. In the current highly risk averse market enviroment, economic trouble has supported the safety trade to the US dollar

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.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD retreats to 1.0850 area as US Dollar rebounds

EUR/USD retreats to 1.0850 area as US Dollar rebounds

EUR/USD has extended its slide toward 1.0850 in the American session. Profit-taking ahead of the weekend and the negative shift witnessed in risk sentiment seems to be helping the US Dollar gather strength against its rivals, weighing on the pair.


GBP/USD trades on the back foot below 1.2400

GBP/USD trades on the back foot below 1.2400

GBP/USD is having a difficult time gathering recovery momentum and trading in negative territory below 1.2400 on Friday. Although the data from the US showed that PCE inflation continued to soften in December, the US Dollar holds its ground heading into the weekend.


Gold struggles to hold above $1,930

Gold struggles to hold above $1,930

Gold price has lost its traction and declined below $1,930 during the American trading hours. The benchmark 10-year US Treasury bond yield clings to modest daily gains above 3.5% ahead of the weekend, not allowing XAU/USD to gain traction.

Gold News

Is the dramatic rise in whale activity in AAVE, MATIC and DYDX a sell signal?

Is the dramatic rise in whale activity in AAVE, MATIC and DYDX a sell signal?

AAVE, MATIC and DYDX price rallied alongside large market capitalization cryptocurrencies Bitcoin and Ethereum in January. Experts at the crypto intelligence tracker Santiment believe the recent spike in activity by whales on these networks needs to be watched closely.

Read more

Breaking: US annual Core PCE inflation declines to 4.4% in December as expected

Breaking: US annual Core PCE inflation declines to 4.4% in December as expected

Inflation in the US, as measured by the Personal Consumption Expenditures (PCE) Price Index, declined to 5% on a yearly basis in December from 5.5% in November, the US Bureau of Economic Analysis reported on Friday.

Read more