In February and even by mid-March, the U.S. housing market was by almost all measures thriving, with lack of inventory and subsequent high prices being the chief complaint as millennial demand created a seller’s market and homeowners across the country saw their equity rise.

Fast forward a month and things look a little different. “The coronavirus pandemic continues to take hold of the domestic and global economy,” said First American Chief Economist Mark Fleming. “The housing market, although in a better position than it was at the onset of the last recession, will not be immune to the impact. Weekly unemployment claims have soared to record highs, which has already contributed to declining consumer confidence.”

In its recently released monthly Potential Home Sales Model, which measures potential home sales based on the relationship between existing-home sales, demographic data and financial market conditions, global title insurance provider First American said that market potential dropped significantly in March. Currently, potential existing-home sales is 1.8 million, or 26.6% below the pre-recession peak of market potential, which occurred in March 2004.

Housing market potential decreased 9% in March relative to the previous month, and fell 7.5% year over year, a decline of nearly of 400,000 potential existing-home sales.

“Market potential fell in March, as lenders tightened credit due to concern that many economically impacted households will not be able to make their mortgage payments,” said Fleming. “In fact, just days ago, JP Morgan Chase said that it would be raising its minimum credit score to 700 on all new mortgages, and that new borrowers will need at least a 20% down payment to qualify – a significant credit hurdle for first-time home buyers. While they are the first bank to make the change, they are not expected to be the last.”

For buyers not impacted by tightening credit, however, house buying power has continued to increase month over month, as mortgage rates remain low and are expected to stay low.

The other good news is that while a contraction in credit availability reduces demand, prices are unlikely to change substantially. “Housing supply remains at historically low levels, so house price growth is likely to slow, but it’s unlikely to go negative,” said Fleming. “The immediate impact of the coronavirus pandemic on the housing market will be a reduction in spring sales activity and a moderation of price appreciation.”