(Bloomberg) -- Manhattan homeowners anticipating a busy spring selling season usually pour listings onto the market in the first quarter. Not this year.
Worried about the coronavirus, they instead held units back, or withdrew them from the market entirely. That pushed the inventory down 8% at the end of March from the begininng of the year -- the first decline for the period since 2007, appraiser Miller Samuel Inc. and brokerage and Douglas Elliman Real Estate said in a report Thursday.
The drop is an about-face for the market, which was showing signs of a revival after two years of sluggish sales. For much of the first quarter -- before social distancing and business shutdowns -- transactions were brisk as sellers dropped prices enough to spur buyers to act. Sales for the full quarter jumped almost 14% from a year earlier, the biggest increase in almost three years.
But that moment is over.
With the country cloistered indoors and the stock market sliding, would-be buyers in Manhattan are re-evaluating high-dollar purchases, debating whether prices need to go even lower. Showings, if they happen, are being done virtually, and they may not be enough to seal a deal.
“Buyers, while they enjoy browsing listings online, will not commit a million dollars or more for a property they have not seen,” Frederick Warburg Peters, chief executive officer of Warburg Realty, said in a report by the brokerage.
Normally, a dip in inventory would signal a positive turn in a market that's been glutted with listings. But this reduction means something different: That all activity in the market is about to come to a halt, said Jonathan Miller, president of Miller Samuel.
Contracts, a measure of future sales, fell 8% in the quarter from a year earlier to 2,258, Corcoran Group said in its own report. For the first two months of the quarter, signings were up 10%, but then plummeted in March.
“The longer the outbreak, the greater the economic damage,” Miller said. “I don't think you can look at this market and believe this is a blip and that things will continue as they left off.”
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