Pending home sales plummeted to a record low in 2020, falling to levels not seen since the depths of the 2008 Great Recession. According to the National Association of Realtors (NAR), pending home sales dropped 16.7 percent from December 2019 to December 2020, the steepest year-over-year decline since the NAR began tracking data in 2001. The data shows that the COVID-19 pandemic and related economic effects have taken an extraordinary toll on the housing market.
Historically low mortgage rates were not enough to reverse the downturn, and the pandemic caused declines in almost every region. The South was hit the hardest, and pending sales in the region fell 24.7 percent. In the Midwest, sales dropped by 7.8 percent, while the Northeast and West declined 16.2 percent and 19.1 percent, respectively.
The decline in pending home sales could indicate future weakness in the housing market. Despite a recovery in sales activity since early in the summer, recent numbers are a stark reminder of the far-reaching economic effects of the pandemic. The decline in pending sales is an early warning sign that the market may remain weak in the near-term, even as vaccinations bring hope for a return to normalcy.