Home prices rose nationally in January, indicating the strength of the housing market before the COVID-19 outbreak.

National home prices rose 3.9% year-over-year in January, up from 3.7% the previous month, according to the S&P CoreLogic Case-Shiller index released on Tuesday. The 20-City Composite posted a 3.1% annual gain up from 2.8% in December and the 10-City Composite increased 2.6% annually, up from 2.3% the previous month.

“This simply affirms what we already knew about the economy prior to the coronavirus outbreak,” said Troy Ludtka, an economist at Natixis CIB.

The housing market started the year with low inventory and strong price gains fueled by low mortgage rates, especially in fast-growing cities such as Phoenix, Tampa, and Seattle. COVID-19’s effect on the housing market will not be evident in the following months because of a lag in the data.

“As long as COVID-19 is around and we’re mostly in lockdown, the housing market is going to freeze,” said economist Issi Romen. He predicts that while there will be very few transactions, housing prices won’t necessarily collapse.

“In past pandemics, in SARS in Hong Kong, prices jumped right back to where they were before the pandemic once restrictions were released,” said Romen.

Phoenix, the city with the highest gains, with a 6.9% year-over-year price increase, has remained relatively strong compared to other markets. Located in Arizona, where the wave of coronavirus cases has not yet overwhelmed the state, agents make the most of the flexibility they still have to operate their business.

Randy Cooney is a broker at Realty Executives, a real estate agency headquartered in Phoenix. “Things were on fire in January because we were running out of inventory, that’s how fast things were selling,” said Cooney. Although he has less prospective transactions in the funnel, Cooney hasn’t seen a significant decline in sales and prices have not been affected.

“If a house falls out of escrow today due to COVID-19 and they had 15 offers on it 4 weeks ago, now they still have 3 people who want to buy it,” said Cooney.

Cooney’s agents are following all recommendations from the CDC and the National Association of Realtors (NAR). Their administrative staff is working from home and agents who choose to continue showing houses take preventative measures. They supply hand sanitizers, wear and provide gloves to those coming through, in some instances, they even leave cupboards open so that people don’t have to touch things.

Tampa tied with Seattle in second place in regard to price gains, with a year-over-year increase of 5.1% in January. Florida is currently the 5th state in the number of COVID-19 cases, the governor’s decision to shut the state down Wednesday is likely to mean an impact on the real estate market in the coming months.

Similar to Phoenix, Tampa has yet to see a significant impact on the number of sales and home prices. Joseph Kipping, a real estate broker in charge of a team of brokers of the Tampa Bay Home Team in Tampa, Florida says the activity leading up to the outbreak was so high that if a buyer or a seller falls through, they have another one in line. He has seen a reduction in showings but his business is offsetting the in-person walkthroughs with virtual tours and 360 videos.

“I’m going out to one of my listings today to do a facetime with the client so she can see the property and decide if she wants to make an offer, so we’re doing things that we wouldn’t do 2 months ago to get the property sold,” said Kipping.

It’s a different story in New York, where Mark Seiden, broker and owner of the Mark Seiden Real Estate Team in Westchester County, New York is starting to furlough employees. Located in the state where COVID-19 has hit the hardest, Seiden can’t fully replace in-person visits with virtual tours.

“It’s like online dating, there’s a lot of people who meet online, they communicate and so forth, but the number of people who meet online and get married without ever meeting in person is practically zero,” said Seiden.

The weeks leading to the New York State pause were already slower as clients became fearful of contracting COVID-19. Once the state mandate went into effect on March 22nd, they were completely unable to show the properties, even if buyers still wanted to see them. On Wednesday night, this changed again, as residential home showings were added to the list of essential businesses. The impact and the uncertainty that his business endured during that week and a half of without showings or home inspections was jarring.

Showing properties was not the only challenge for Seiden. The FHA changed their mortgage standards raising the minimum credit score requirements, risking contracts of buyers who were at the limit and haven’t been funded yet. Other transactions that were in process fell apart when buyers, especially from the hospitality, retail and landscaping industries, lost their jobs. In many cases, this caused a domino effect on other sales, as some sellers were also buyers. Home prices, however, remained constant.

“It’s a wild west out there because it’s not just whether we can show properties or not, it’s also can we get people mortgages and what kind of mortgages can we get them?” said Seiden.

Ludtka predicts that home prices will remain constant in February and decline close to a percent in March. A lot depends on the duration of the shutdown and the economic damage, however, Ludtka estimates that home prices will decline by 15% by the end of the year.