Monthly contract activity also plunges in each of four major regions
Effects of the COVID-19 economic crisis pulled down pending home sales by 20.8% in March, according to the National Association of Realtors.
NAR's Pending Home Sales Index (PHSI) fell 20.8% to 88.2 month over month and was 16.3% lower than a year ago.
"Although the pandemic continues to be a major disruption in regards to the timing of home sales, home prices have been holding up well," NAR Chief Economist Lawrence Yun said. "In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high. I project the national median home price to increase 1.3% for the year, though there will be local market variations, and the upper-end market will likely experience a reduction in home price."
However, Yun said that many people would probably skip out on the usual spring homebuying season due to the pandemic, "so a bounce-back later in the year will be insufficient to make up for the loss of sales in the second quarter."
Yun projects that overall home sales have dropped 14% for the year.
Despite the disruption, digital tools like video tours and eSigning are easing buyers' and sellers' dilemmas, according to Yun. He cited data from NAR's survey that found 58% of realtors reporting that buyers are requesting virtual tours and 43% said buyers prefer eClosings.
"As consumers become more accustomed to social distancing protocols, and with the economy slowly and safely reopening, listings and buying activity will resume, especially given the record low mortgage rates," Yun said.
Regional breakdown
All major regions posted declines in month-over-month contract activity and year-over-year pending home sales transactions.
Pending home sales in the Northeast decreased 14.5% to 82.3 in March, down from 11% last year. In the Midwest, PHSI decreased 22% to 85.6 in March, down 12.4% from a year ago.
The index in the South decreased 19.5% to 103.7 in March, down 17.8% year over year. The Western PHSI decreased by 26.8% to 71.4, down 21.5% year over year.
