Sales of new homes are likely to plunge in March and April amid the coronavirus pandemic
Washington (AFP) - In the US economy before the coronavirus pandemic, sales of new homes remained strong, albeit a bit slower than the weather-induced surge in January, the Commerce Department reported Tuesday.
But economists warn the damage from the outbreak will become evident in the March and April sales figures, as reduced borrowing rates cannot overcome the shutdown of the US economy.
New home sales slipped 4.4 percent to an annual rate of 765,000, seasonally adjusted, still stronger than expected but a bit cooler than the revised 800,000 pace in January, according to the report.
That was nonetheless more than 14 percent higher than in February 2019.
Even before the Federal Reserve cut the benchmark lending rate to zero to help support the economy, low mortgage costs and very tight supply spurred demand and sent the median sales price for a new home surging to $345,900 from $325,300 in the prior month.
Ian Shepherdson of Pantheon Macroeconomics warned coming data will be “grim.”
The “huge wave of job losses and city/state lockdowns mean that activity will tank in March and then fall further in April,” he said in an analysis.
“We hope to see better numbers by June, contingent on the spread of the virus, but the loss of so many potential homebuyers due to rising unemployment means that the ground being lost now will not be recovered quickly.”
Home sales were driven by gains in the south and northeast, while the midwest and west experienced a slight slowdown, according to the data.