Implications:  Existing home sales dropped the most in more than four years in March as the effects of the Coronavirus started to be felt.  We expect more weakness in the months ahead as social distancing and government-mandated lockdowns weigh on activity.  Remember, existing homes are counted at closing, so mostly reflect sales contracts made in January and February.  Contracts on existing homes were up January and February, which normally would have suggested a strong report on closings for March.  The difference was the Coronavirus.  While it's true that many realtors are using virtual-tour technology to show homes to potential buyers, most people still want to see things in-person before they make one of the biggest purchasing decisions of their lives.  Current quarantine restrictions and social distancing measures are also going to hold back a recovery in the inventory of existing homes, as fewer potential sellers list their properties.  Inventories in March were down 10.2% versus a year ago (the best measure for inventories given the seasonality of the data), the tenth consecutive year-over-year decline.  The primary culprit behind the weak existing home market in 2018 was lack of supply, so continued declines could impede a recovery even after the quarantine restrictions are lifted.  The current months' supply – how long it would take to sell the current inventory at the most recent sales pace – was only 3.4 months in March.  Notably, this measure has now been below 5.0 months (the level the National Association of Realtors considers tight) since late 2015.  With demand so strong that 52% of homes sold in March were on the market for less than a month, inventories remain crucial to sales activity once the coronavirus emergency passes.  One other interesting piece of data in today's report was that despite all the disruptions mentioned above, the median price of existing homes rose 3.8% in March and is now up 8.0% in the past year, an acceleration from the 4.0% gain over the 12 months ending in March 2019.  This is in sharp contrast to the 2008 Financial Crisis when the pace of home price growth began falling well ahead of the recession. The coming months will continue to offer us a murky picture of the housing market.  However we expect a rebound in activity once the virus is dealt with and people go back to work. 

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