Are homebuyers back already?

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Published Date 5/29/2020

Because so much of the economy has taken a hit during these past few months of the pandemic, you’d think everything would be experiencing negative numbers. Not so with mortgage applications. Mortgages to purchase homes gained for the 6th consecutive week to a level 6.7% higher than a year ago, back when a deadly pandemic wasn’t interrupting the spring home-buying season, according to Housing Wire’s Kathleen Howley.

She quotes the Mortgage Bankers Association, who says, “A seasonally adjusted index measuring purchase applications jumped 9% last week. Applications for refinances fell 0.2% from the prior week, though the level was 176% higher than a year ago.”

It’s somewhat surprising to note that last week’s purchase applications were up 54% from early April when most U.S. states were under lockdown orders to keep people at home to stem the spread of COVID-19, as is reported by Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search,” he says. “The surge in purchase demand drove the overall index, measuring both purchase and refi applications, higher by 2.7% on a seasonality adjusted basis from the prior week, the report said.

What is driving this demand? Howley surmises that it is driven by a shortage of homes on the market that preceded the epidemic, coupled with mortgage rates near the lowest levels ever recorded. The supply of properties on the market by the end of April was at the lowest level ever recorded for the month, according to Lawrence Yun, the National Association of Real Estate’s (NAR) chief economist.

Source: TBWS

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