Pending home sales in the U.S. plunged by more than expected in the month of April, the National Association of Realtors revealed in a report on Thursday.
NAR said its pending home sales index plummeted by 21.8 percent to 69.0 in April after tumbling by 20.8 percent to 88.2 in March. Economists had expected pending home sales to slump by 15.0 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
"With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases," said Lawrence Yun, NAR's chief economist.
The steep drop in pending home sales in April reflected the biggest decline since NAR begin tracking such transactions in January 2001.
However, Yun expects April will be the lowest point for pending contracts and May, consequently, will be the lowest point for closed sales.
"While coronavirus mitigation efforts have disrupted contract signings, the real estate industry is 'hot' in affordable price points with the wide prevalence of bidding wars for the limited inventory," Yun said.
He added, "In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures."