Why Aren’t Home Prices Falling in Current Economic Conditions?
America is facing an economic crisis as 38 million Americans face unemployment, but housing prices are staying fairly stable. They actually increased 1.4 percent year-over-year for the week ending May 9. How is it that Americans are facing massive paycheck cuts and layoffs, but housing prices aren’t in free fall? The key lies in supply and demand. Though the number of homebuyers have decreased during the pandemic, inventory has plummeted much faster, keeping prices stable. Additionally, the small number of sales is helping keep prices steady. See how sales are faring in your city and how home prices stack now stack up against previous recessions.
More than 38 million Americans have lost their jobs since the outbreak of the COVID-19 pandemic. Stay-at-home orders have ground much of the economy to a halt, prompting trillions in stimulus spending by the federal government in hopes of keeping industries afloat.
But anyone hoping a silver lining to the economic chaos would be deals in the housing market have thus far been disappointed; for the week ending May 9, the median listing price in the United States was up 1.4 percent year-over-year, according to Realtor.com. Existing home sales in April fell by almost 18 percent, but prices rose 7.4 percent compared to a year ago.
Why isn’t the tanking economy bringing home prices down with it? It’s a reasonable question given that so much of the economy moves in lockstep, and the last economic crisis in 2008 sent the housing market into free fall.