The Mortgage Bankers Association’s latest Weekly Application Survey shows a 0.3% seasonally adjusted decline in loan application volume from the previous week. The Refinance index decreased by 1% from the previous week and was 225% higher than it was the same week one year ago. The Purchase Index increased 2% from one week earlier but was 31% lower than it was the same time a year ago. The MBA notes that the pandemic-related economic stoppage has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. This has resulted in reduced buyer traffic, less inventory, and March existing-homes sales falling to their slowest annual pace in nearly a year. Most importantly, the economic stoppage has halted the momentum in the housing market generated by young, would-be homebuyers, mostly from the millennial generation, preventing them from entering the market.

With the federal government’s recent passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act, not only did qualifying individuals receive economic impact payments, i.e., stimulus checks, but small businesses were also extended emergency advances of up to $10,000 as part of the Small Business Administration’s economic injury grant. With these measures in place, expanding businesses and families’ balance sheets to accommodate for more real estate is less of a priority than keeping their existing assets afloat. The CARES act also provides options for mortgage forbearance.

As can be seen from the above figure, year-over-year gains in refinancing skyrocketed in the middle of March and continued their upward trajectory towards the end of the second week of April. Year-over-year purchasing changes, however, slipped into negative territory for that period, posting a year-over-year decline of 31% in the latest week. The National Association of Realtors cites that lender credit standards such as higher down payments and credit scores would likely deter home sales’ bounce when the pandemic is over. Before the outbreak, foreclosure rates were at historic lows.

A recent NAHB survey shows the negative effect the coronavirus pandemic is having on the decision to remodel.  Over 90 percent of remodelers in the survey reported a slowdown in both the rate at which inquiries are coming in, and in the general willingness of homeowners to remodel at this time.

This information was collected via a question added to the survey for NAHB’s first quarter 2020 Remodeling Market Index (RMI).  The RMI question listed eight possible impacts of the coronavirus and asked the professional remodelers in the panel if each has so far had a major, minor, or no adverse effect on their businesses.  As indicated above, at the top of the list 96 percent of remodelers said the virus was hurting the rate at which inquiries are coming in and 93 percent said the virus was hurting the general willingness of homeowners to remodel at this time.  A full 70 percent characterized the negative impact on inquiries as major rather than minor.

Other adverse impacts on the list have also become widespread.  Over 80 percent of remodelers said the virus was having a noticeable, adverse impact on homeowners’ concerns about interacting with remodeling crews (86 percent), supply of n95 respirator face masks (84 percent) and cancellations or delays of existing projects (also 84 percent).  Although somewhat less widespread, willingness of workers and subs to report to a remodeling site, supply of building products and materials, and amount homeowners are willing to pay for remodeling work were still cited as significant negative effects of the pandemic by over half of the remodelers.

In some respects, the impact of the coronavirus on the remodeling market mirrors what we’re seeing in the market for new homes.   In both cases, the pandemic is having a number of significant negative impacts, but the strongest ones are the negative impacts on the behavior of potential customers.

After reaching 13-year high last month, existing home sales, as reported by the National Association of Realtors (NAR), plummeted in March as expected due to the coronavirus outbreak.

Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, dropped 8.5% to a seasonally adjusted annual rate of 5.27 million in March, largest monthly decline since November 2015. On a year-over-year basis, however, sales were still 0.8% higher than a year ago.

The first-time buyer share rose to 34% in March from 32% last month and 33% a year ago. The March inventory level rose to 1.50 million units from 1.46 million units in February but decreased from 1.67 million units a year ago.

At the current sales rate, the March unsold inventory represents a 3.4-month supply, up from 3.0-month in February but down from a 3.8-month a year ago.

Homes stayed on the market for an average of 29 days in March, down from 36 days both last month and a year ago. In March, 52% of homes sold were on the market for less than a month.

The March all-cash sales shared 19% of transactions, down from 20% last month and 21% a year ago.

Despite the steep monthly decline in sales, home prices remained solidly strong. The March median sales price of all existing homes was $280,600, up 8.0% from a year ago, representing the 97th consecutive month of year-over-year increases. The median existing condominium/co-op price of $263,400 in March was up 7.9% from a year ago.

Regionally, all regions saw a decline in existing home sales in March compared to previous month, ranging from 3.1% in the Midwest to 13.6% in the West. On a year-over-year basis, sales grew 4.2% and 0.9% in the Midwest and the South, while sales fell 3.0% and 0.9% in the Northeast and the West.

As March sales reflect contracts signed in January and February, before the virus paralyzed the economy, we might see a deeper decline in sales in the coming months. Meanwhile, reflecting the growing effects of the COVID-19 pandemic, builder confidence plunged 42 points to 30 in April, the largest monthly drop in the 35-year history of the index.