What change might COVID-19 have on home values?

A huge challenge facing the home industry is determining what impact the current pandemic may have on home values. Some buyers are hoping for major price reductions because the health crisis is straining the economy.
The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item. In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 5-7 months of inventory. Anything over seven months would be considered a buyer's market, with downward pressure on prices. Anything under six months would indicate a sellers market, which would put pressure on prices.
Going into March of this year, the supply stood at three months – a very strong seller’s market. While buyer demand has decreased rather dramatically during the pandemic, the number of homes on the market has also decreased. The recently released Existing Home Sales Report  from the National Association of Realtors  revealed we currently have 3.5 months of inventory. This means homes should maintain their value during this pandemic.