Pandemic slows May home sales nationally and in Wisconsin
Existing home sales in the U.S. plunged 9.7% in May. It was the third straight monthly decline and further evidence of the harm the virus pandemic has done to the housing market.
In Wisconsin, the Wisconsin Realtors Association said COVID-19 had a “significant impact on existing home sales in May.”
In its monthly analysis of home sales, the WRA found May home sales fell by 25.8% in 2020 compared to the same month in 2019. Median prices continued to rise at a robust pace, increasing 6.2% to $214,000 in May compared to May 2019.
“Home sales that closed in May were likely under contract in late March or early to mid-April, and this is the time when a lot of potential buyers and sellers decided to sit tight,” said WRA Chairman Steve Beers. He noted that we’re still in for a rough summer in terms of home sales, but the re-opening of the state economy should help.
Nationally the median price of a home sold in May was $284,600, up 2.3% from a year ago.
Lawrence Yun, chief economist of the National Association of Realtors, said based on anecdotal reports, he believed May could turn out to be the bottom for the housing market with sales showing a V-shaped recovery in coming months. However, many private economists believe the recovery from the disruptions caused by the coronavirus could take much longer.
The National Association of Realtors said Monday that the monthly decline pushed sales down to a seasonally adjusted annual rate of 3.91 million, the slowest pace since a home buyers tax credit expired in October 2010.
Sales fell in all regions of the country, with the biggest decline coming in the Northeast where virus infections were especially heavy.
Sales of both existing and new homes have fallen sharply during the traditional spring selling season as communities were locked down to prevent the spread of the coronavirus.
“Home prices are still appreciating quickly, which isn’t surprising, given that inventories fell dramatically in May,” said Wisconsin Realtors Association President & CEO Michael Theo. “Even with decreasing supply and rapid price appreciation, Wisconsin housing is still very affordable, thanks to record-low mortgage rates,” said Theo. The Wisconsin Housing Affordability index shows the percent of the median-priced home that a qualified buyer with median family income can afford to buy, assuming a healthy 20% down payment and the balance of the home financed with a 30-year fixed-rate mortgage. The index fell just 2% from 199 in May 2019 to 195 in May 2020. “These excellent mortgage rates mean that affordability barely changed even as home prices rose and median family income fell,” said Theo.