The coronavirus pandemic has disrupted nearly every aspect of our daily lives, affecting major milestones like graduation ceremonies, weddings and home purchases, which have all been put on hold as the country hunkers down to flatten the curve.
Capital Economics, a UK-based research and consulting firm, has published its response to the latest US housing figures for the month of February, noting that the full impact of the coronavirus won’t be measurable until next month’s report is released on April 23rd.
New home sales dipped 4.4 percent from January to February, not all that surprising as it came in the wake of January’s 13-year record-breaking performance of 800,000 annualized sales. Year-over-year, however, February home sales were up 14.3 percent, which Capital Economics attributed to low inventory, modest employment growth and declining mortgage rates.
Image: Capital Economics
Although the response painted quite a bleak picture of what’s to come — Capital Economics, well-known for its bearish takes on the market, “wouldn’t rule out” a 50 percent drop in home sales between 2019 Q4 and 2020 Q2 — there was this glimmer of optimism from Property Economist Matthew Pointon:
“The high level of sales at the start of the year shows that the new home market was on a strong footing prior to the outbreak and gives hope that sales will see a decent recovery once the outbreak has been brought under control.”
The Senate is expected to vote on the estimated $2 trillion stimulus package on Wednesday, which could spur the recovery of the housing market once the spread of the virus is under control and stay-at-home orders are lifted.