The Summer Home-Buying Season
May Be Much Hotter Than Expected—Here’s Why
Until recently, the prognosis for the housing market was not great. With the economy in a free fall, home sellers swiftly took down their “For Sale” signs and many buyers chose to wait out the coronavirus pandemic. It was like the pause button was pushed on the normally bustling spring home-buying season.
But as states reopen their economies, the summer real estate market just might turn out to be hotter than anyone was anticipating. For the first time in more than two months, mortgage applications for home purchases were up year over year, rising an impressive 8.7% as buyers raced to lock in record-low mortgage rates in the week ending May 22.
This is according to a weekly survey from the Mortgage Bankers Association that spans more than 75% of U.S. residential mortgage applications. The purchase loans did not include mortgage refinances for those who already own homes.
“This is a bit of a bigger rebound than I expected,” says realtor.com® Chief Economist Danielle Hale. “It’s a sign that we are going to see a delayed seasonal bump in home sales. There’s pent-up demand from people who were not able to get out in the early part of the spring, and we’re seeing that now.
“Normally we see sales really ramp up in March and April,” she continues. But amid the pandemic and widespread job losses, many Americans wanted to wait not only until they felt more secure in their jobs but also until they could physically step into the homes they were considering. “We’re going to see that ramp up in June and July,” says Hale.
The recovery may be thanks to folks becoming more comfortable with the idea of embarking on the home-buying process as they have gotten used to taking precautions such as wearing masks and keeping social distance. Plus, more sellers are listing their homes now that cities and states are loosening restrictions. And then there are those ultralow mortgage rates, hitting 3.08% on Wednesday for a 30-year fixed-rate loan, according to Mortgage News Daily.
“The low mortgage rates, without a doubt, is helping to entice buyers back into the market,” says Lawrence Yun, chief economist of the National Association of Realtors®. Folks may also look at it as a less volatile investment. “Real estate may be viewed as a safe asset in the upcoming years.” Realtor.com May 2020
Melanie Snow
