Coronavirus takes steam out of home buying season but sales, prices should rebound

Coronavirus takes steam out of home buying season but sales, prices should rebound

Home sales will likely plunge this spring in the wake of the coronavirus pandemic, but bounce back by the end of next year, according to a new forecast from real estate search site Zillow.

Sales will likely plummet by up to 60%, as stay-at-home mandates and overall worries about the economy take the steam out of what was previously expected to be a robust spring home-buying season, according to Zillow's economists and analysts.

But prices will likely experience a much slighter slide, and a quicker recovery. Zillow expects prices to drop no more than 3% by the end of this year, and then creep back up throughout 2021.

Home sales should also increase by roughly 10% a month through 2021, according to the forecast.

“Much uncertainty still exists, particularly with some states beginning to reopen and experts warning of a possible second wave of the coronavirus in the fall,'' Svenja Gudell, Zillow’s chief economist said in a statement. "However, housing fundamentals are strong, much more so than they were leading into the Great Recession, and that bodes well for housing in general.”

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Before measures to contain the coronavirus escalated in March, the home-buying market was expected to be strong, fueled by historically low interest rates, a limited number of properties for sale and an eagerness by younger Americans to purchase their first homes.

That pent-up demand remains despite the current economic uncertainty, Zillow says, noting that the number of new listings and pending sales is already increasing. And the real estate industry has adapted to the changing environment, using technology to allow for transactions amid the need for social distancing.

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That means prices will barely budge, unlike during the Great Recession when housing prices plunged almost 25% and took five years to reach levels seen before the downturn.

"Despite the difficulties, we're seeing several signs that there is still a good amount of demand for housing and buyers, sellers and agents are growing more comfortable moving transactions forward where possible,'' Gudell says.

Follow Charisse Jones on Twitter @charissejones

Source: https://www.usatoday.com/story/money/2020/05/04/coronavirus-plunging-home-sales-should-rebound-2021/3072355001/

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