According to the Mortgage Bankers Association’s Weekly Applications Survey, purchase activity continued to climb last week, rising 5 percent from the week before. The improvement marks eight consecutive weeks of increases and puts demand for loans to buy homes 13 percent higher than they were last year at the same time. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says low mortgage rates and pent-up demand are the driving forces behind the rebound. “Fueled again by low mortgage rates, pent-up demand from earlier this spring, and states reopening across the country, purchase mortgage applications and refinances both increased,” Kan said. “The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January.” Also in the report, average mortgage rates were mostly up from the previous week, with rates for 30-year fixed-rate mortgages with both conforming and jumbo balances higher than last week. Rates for loans backed by the Federal Housing Administration declined. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source) 

Despite the economic shock caused by the coronavirus pandemic, home prices have remained firm. Mostly that’s because there were already too few homes for sale in many markets and the pandemic only made it worse. In other words, there were more buyers than homes for sale before the coronavirus hit in mid-March and there still are. But despite the market imbalance – which puts upward pressure on prices – many home sellers are listing their homes at a discount. In fact, according to a new analysis from Weiss Analytics, in the top 25 markets with the highest percentages of discounted listings, at least one-quarter of all new listings have been priced lower than pre-pandemic prices. In some areas, listings can be found at as much as 11 percent below where they were in early March. Allan Weiss, CEO of Weiss Analytics, says there are many reasons sellers might price their home lower, even in markets where median prices are rising. “Sellers are discounting their homes for many reasons,” Weiss said. “The sharp decline in April sales motivated many sellers to price their homes to sell. Homeowner equity is at a historic high, and many owe nothing on their homes. They may simply want to sell quickly to trade up or relocate, and that is a choice they can make.” (source)

Fannie Mae’s Home Purchase Sentiment Index is a monthly measure of how Americans feel about the housing market, buying and selling a home, the economy, and their personal financial situation. After hitting highs earlier in the year – with Americans optimistic about the market and their money – the index saw big declines after coronavirus mitigation efforts were put in place. But, according to the most recent results, consumer sentiment is starting to rebound. In fact, the overall index was up 4.5 points in May, with an increasing number of respondents who said they felt like now was a good time to buy or sell a home. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says there are still concerns but Americans are gaining confidence. “Low mortgage rates have helped cushion some of the impact of the pandemic on consumer sentiment regarding whether it’s a good time to buy a home, which picked back up this month to late-2018 levels,” Duncan said. “Home-selling sentiment remains severely dampened due primarily to economic concerns, though increased purchase activity may improve the confidence of some potential sellers.” (source)

Before you start looking at homes, you have to make some decisions. Where you’d like to live should be among the first. After all, you can’t begin to calculate the costs and whether or not you can afford them without knowing what areas you’ll be targeting. For example, would you prefer a place in the city or a house in the suburbs? Well, if new home construction is any indicator, many Americans are making the decision to move further away from city centers and into the inner and outer suburbs. According to a new report from the National Association of Home Builders, construction activity has been increasing in low-density markets for a while now. For example, their Home Building Geography Index recently showed the strongest growth in the outlying suburbs of small metro areas. And that trend is likely to be exacerbated by the effects of the coronavirus. For one, the pandemic hit high-density areas the hardest, which may lead people to want a home away from the densely populated urban core. Another factor is the increasing number of people working from home. Americans who no longer have to consider their commute to work are more likely to be comfortable living further from the city. Whatever the case, the trend is clear. Americans are ready to spread out and home builders have noticed. (source)

The number of homes for sale has been lagging for years. It’s been among the housing market’s main challenges. That’s because a lack of available homes combined with rising buyer demand leads to steady price increases and declining affordability. But while that can be good for homeowner equity, it’s bad for buyers – especially first-time buyers who don’t have the benefit of cashing in their equity to help fund a home purchase. This continuing imbalance only got worse when the coronavirus led to stay-at-home orders across the country. That caused some buyers to delay their plans but, more than that, it led homeowners to think twice before putting their home up for sale. This caused new listings to plummet. In fact, according to one recent analysis, the national inventory of homes for sale is down nearly 20 percent from last year. The good news, though, is things are starting to get better. By the end of May, the number of new listings had improved in 45 of the 50 largest U.S. markets compared to the month before. And while they’re still down, the fact that the rate of decline has gotten smaller is an indication that home sellers are starting to return to the market. If the trend continues, it’ll lead to a better balanced, and healthier, housing market. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates hit another low last week. Rates were down week-over-week for most loan categories, including 30-year fixed-rate loans with conforming and jumbo balances and 15-year fixed-rate loans. The declines helped push demand for home purchase loans higher. In fact, requests for loan applications to buy homes rose another 5 percent from last week and are now 18 percent higher than they were at the same time last year. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the numbers are encouraging but challenges remain. “Purchase applications continued their recent ascent, increasing 5 percent last week and 18 percent compared to a year ago. The pent-up demand from home buyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” Kan said. “However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The housing market, like any market, is a balance of supply and demand. That means, conditions are a reflection of how many buyers and sellers there are, rather than the strength or weakness of the overall economy. For example, when coronavirus mitigation efforts shut down much of the country’s economy, there was a lot of speculation about what would happen to prices. But, though the economy suffered, home prices didn’t. In fact, they rose. According to the most recent CoreLogic Home Price Index Report, home prices increased 5.4 percent in April over last year at the same time. And, not only did they improve, they did so at a stronger pace than last April, when they were up just 3.6 percent. So why did home price gains accelerate while the economy was suffering a severe downturn? Well, it’s pretty simple, actually. When stay-at-home orders went into place, many home sellers pulled their listings and decided to wait a while before selling. The corresponding drop in for-sale inventory meant there were more home buyers than homes for sale, which led to more competition for available homes, bidding wars, and higher prices. (source)