COVID-19

Despite economic downturn, home prices haven’t come down much

Amy Scott Jun 22, 2020
Heard on: Marketplace Morning Report
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The number of homes for sale is down 17% from this time last year. Frederic J. Brown/AFP via Getty Images
COVID-19

Despite economic downturn, home prices haven’t come down much

Amy Scott Jun 22, 2020
The number of homes for sale is down 17% from this time last year. Frederic J. Brown/AFP via Getty Images
Share Now on:
HTML EMBED:
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U.S. home sales dropped to their slowest pace in nearly 10 years in May. The National Association of Realtors reported sales of existing homes fell 9.7%, to a seasonally adjusted annualized rate of 3.91 million units.

With mortgage interest rates staggeringly low, plenty of people still want to buy homes right now. Zillow economist Skylar Olsen sees it in data on deals that are in the works.

“Pending sales hit their absolute bottom relative to last year in mid-April, and since then have now risen to become almost 14% higher than this time last year,” Olsen said.

But the number of homes for sale is down 17% from this time last year, and that’s propping up prices. The supply of new homes is also tight. The pandemic has slowed building.

Ali Wolf, chief economist with Meyers Research, said that in a survey of builders, more than half said they’d raised prices in the past week.

“Why would they slash their prices right now? They have no reason to,” Wolf said.

That could change, though, when emergency unemployment benefits and other relief programs expire.

The National Association of Realtors found that almost half of homeowners have considered selling because they can’t afford their mortgage payments.

COVID-19 Economy FAQs

Will the federal government extend the extra COVID-19 unemployment benefits?

It’s still unclear. Congress and President Donald Trump are deciding whether to extend the extra $600 a week in unemployment benefits workers are getting because of the pandemic. Labor Secretary Eugene Scalia believes the program should not be extended, and White House economic adviser Larry Kudlow said the additional money is disincentivizing some workers from returning to their jobs. Democrats want to keep providing the money until January.

As states lift restrictions, are people going back to stores and restaurants?

States have relaxed their restrictions, and many of us have relaxed, too. Some people have started to make exceptions for visiting restaurants, if only for outdoor dining. Some are only going to places they trust are being extra cautious. But no one we’ve talked to has really gone back to normal. People just aren’t quite there yet.

Will surges in COVID-19 cases mean a return to lockdowns?

In many areas where businesses are reopening, cases of COVID-19 are trending upwards, causing some to ask if the lockdowns were lifted too soon, and if residents and businesses might have to go through it all again. So, how likely is another lockdown, of some sort? The answer depends on who you ask. Many local officials are now bullish about keeping businesses open to salvage their economies. Health experts, though, are concerned.

You can find answers to more questions here.

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