Sales of previously owned homes decline by most since 2010

Sales of previously owned homes fell in April by the most since mid-2010 as the coronavirus hollowed out demand across the country at the start of the key spring selling season.

Closing transactions declined 17.8% from the prior month, the biggest drop since July 2010 after the expiration of a homebuyer tax credit, to an annualized pace of 4.33 million, according to data from the National Association of Realtors. The April rate was the slowest since September 2011 and compares with the Bloomberg survey median of 4.22 million rate.

The pandemic has undercut demand in many markets, as tens of millions of Americans lost their jobs in the past few months and remain generally uncertain about future economic conditions. Despite mortgage rates near record lows, the outbreak put a freeze on showings and open houses as people stay home.

"The economic lockdowns — occurring from mid-March through April in most states — have temporarily disrupted home sales," Lawrence Yun, NAR's chief economist, said in a statement. "But the listings that are on the market are still attracting buyers and boosting home prices."

So far, prices have held up. Inventory was tight before the pandemic and with homeowners reluctant to move because of health and employment risks, the buyers who have started returning to the market are facing bidding wars in some markets.

The median home price increased 7.4% from a year earlier to $286,800. Inventory was down 19.7% last month from a year ago to 1.47 million units, the lowest on record for any April. The number of homes for sale would last 4.1 months at the current sales pace. Anything below five months is seen as a tight market.

Meantime, the residential real estate market may be starting to stabilize. May data from the National Association of Homebuilders and Wells Fargo showed builder sentiment improved after falling in April by the most in records back to 1985. The housing market picked up last year and early this year after a lackluster 2018.

Existing home sales slumped in all U.S. regions in April, led by a 25% drop in the West from a month earlier. Contract closings also fell 17.9% in the South, 12% in the Midwest and 16.9% in the Northeast.

Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and will be released Tuesday.