With growing evidence that the coronavirus is turning into a pandemic, a hit to housing market activity is inevitable. No hard numbers have been released yet, but home sales are vulnerable to any disruption the virus will cause. Delaying a major purchase such as a home is an obvious first step to take, and heading to open houses and viewing homes is not advisable during an outbreak. We therefore expect a drop in the share of households who view now as a good time to buy a home, which was relatively low even before the arrival of Covid-19. The drop in the 10-year Treasury yield to around 0.7% means mortgage rates are likely to fall below their past record low of 3.42%, but that won’t be enough to prevent a decline in home sales over the next few months.
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