Coronavirus could push more Americans to the suburbs
The contrast of new and existing U.S. home sales over the past few months portends an interesting potential long-term change for the U.S. economy.
Driving the news: Existing home sales fell to their lowest level in nearly 10 years last month, with prices rising by the smallest annual amount in more than eight years.
- Those numbers reflect closings on contracts signed in March and April, and pending sales of existing homes for those months showed declines of 20.8% and 21.8% respectively.
On the other side: Sales of new single-family homes unexpectedly rose slightly in April, despite the lockdowns, after falling by 13.7% in March.
- Overall, economists expect that the worst of the housing market declines are in the past, as mortgage purchase applications rose to their highest level in 11 years last week.
The big picture: A housing shift may be accelerating from cities, where existing homes dominate, to suburbs, which are packed with new houses.
What they're saying: Danielle Hale, chief economist at Realtor.com, says in a note that she's expecting new home sales to rebound even further in May.
- New home sales are "benefiting from still-limited availability of existing homes for sale coupled with surging homebuyer demand including renewed interest in suburbs and the extra space they enable buyers to afford."
- Data from Realtor.com shows views per property in suburban zip codes grew by 13%, nearly doubling the pace of growth compared to urban areas in May.
- Suburban properties have outpaced urban for some time. However, "May marks the largest gap in this discrepancy since we started tracking the metric in 2016, aside from one month in September 2018," the company notes in a recent blog post.