Existing home sales tumbled 8.5% to a seasonally adjusted annual rate of 5.27 million units last month. The percentage decline was the largest since November 2015. The data reflected contracts signed in February or even January, before measures to curb the spread of the virus paralyzed the economy.
Economists polled by Reuters had forecast existing home sales would tumble 8.1% to a rate of 5.30 million units in March. Existing home sales, which make up about 90% of US home sales, rose 0.8% on a year-on-year basis in March.
States and local governments have issued "stay-at-home" or "shelter-in-place" orders affecting more than 90% of Americans to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, and abruptly halting economic activity. At least 22 million people have filed for unemployment benefits since March 21.
The housing market was back on the recovery path, thanks to low mortgage rates, before the lockdown measures. It had hit a soft patch starting in the first quarter of 2018 through the second quarter of 2019.
Retail sales suffered a record drop in March and output at factories declined by the most since 1946. Homebuilding crumbled in March at a speed not seen in 36 years. Despite the plunge in home sales and homebuilding last month, economists expect the housing market contributed to gross domestic product in the first quarter because of robust gains at the start of the year.
But housing accounts for less than 3% of GDP. Economists believe the economy contracted at its sharpest pace since World War Two in the first quarter. The government will publish its snapshot for first-quarter GDP next Wednesday.
There were 1.50 million previously owned homes on the market in March, the lowest on record and down 10.2% from a year ago. The median existing house price increased 8.0% from a year ago to $280,600 in March. The NAR said there was no indication the house price inflation would slow given tight inventory.
But economists expect slow house price growth or even a ecline in home values.
At March's sales pace, it would take 3.4 months to exhaust the current inventory, down from 3.8 months a year ago. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
Last month, houses for sale typically stayed on the market for 29 days, down from 36 days both in February and a year ago. Fifty-two percent of homes sold in March were on the market for less than a month. First-time buyers accounted for 34% of sales last month, up from 32% in February and 33% a year ago.