Mortgage applications continued an eight-week streak of gains as home buyers rush back into the housing market. Purchase applications, viewed as a gauge for future home sales, were up 5% last week compared to the previous week.
Despite the pandemic, applications for home purchases are now 13% higher than a year ago, the Mortgage Bankers Association reported Wednesday. “The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January,” says Joel Kan, an economist with the Mortgage Bankers Association.
Will Surging Online Home Searches Jumpstart Sales?
June 2, 2020
Real estate sites are reporting a jump in online home searches. Comparing March 20 (as the onset of the COVID-19 pandemic struck the U.S.) to May 9 (the most active day of the year for home searches so far), Point2Homes says visits to its real estate marketplace have surged 125%. The online real estate portal also says site visits are now up 55% year over year.
Google Trends data also shows that the search phrases “houses for sale,” “cheap homes for sale,” and “house with garden” have been rising since April. View data broken out by markets where Google searches for “homes for sale” are seeing the strongest rebound.
Despite searches being up, the share of buyers in the market today is fewer than prior to the pandemic as some have changed their plans, at least in the interim. Point2 Homes, which surveyed nearly 24,000 prospective buyers at its site between March 23 and April 29, saw the percentage of people who are still looking to buy a home dropped from 40% to 32%.
For those still in the market, many are looking for a deal, surveys show. Forty percent of consumers who say they’re looking for a home said they’re looking for a less expensive home, up from 36% at the end of March, according to Point2 Homes.Source: “Homebuyers, Eager to House Hunt Again, Ramp Up Online Searches,” Point2 Homes (May 18, 2020)Comment
The growing trend of working remotely could untether Americans from office spaces in pricey areas and prompt them to buy homes elsewhere. Home sales in the suburbs as well as smaller, less expensive cities could see a boost that continues beyond pre-pandemic levels, The Wall Street Journal reports.
Some tech companies, including Facebook, Twitter, and Square, have already announced that they will allow select employees to work remotely full time. They expect half of their workforce to work remotely within five to 10 years. Facebook CEO Mark Zuckerberg says that about 75% of his employees have already expressed an interest in moving to a different city if they could work remotely.
Why do people decide to stay or leave a community? A new joint survey from the Urban Institute and the Knight Foundation seeks to find the true motivations behind Americans’ choices for places to live. The survey of more than 11,000 consumers was conducted before the COVID-19 pandemic. Here are a few highlights from their findings:
A shift in the mix of home buyers has been occurring since the pandemic began. Investor numbers are shrinking, while the number of home shoppers purchasing their first home ever is on the rise. These buyers are freed from having to sell a home prior to purchasing, and they are valuing homeownership in a pandemic.
The share of first-time buyers rose to 36% in April 2020, up from 32% a year ago, the National Association of REALTORS®’’ April 2020 REALTORS® Confidence Index Survey shows.
For Some, 30-Year Rates at 2.5% Are Possible
May 19, 2020
Borrowers with top-notch credit are scoring mortgage rates lower than the record average lows being reported. Freddie Mac announced the 30-year fixed-rate mortgage averaged 3.28% for the week ending May 14, but home shoppers with stellar credit could snag one with a rate of about 2.5%, according to The Mortgage Reports.
The Mortgage Reports’ daily rate survey shows that rates for 30-year, fixed rates for FHA and VA loans have fallen to 2.75%, in some cases. Borrowers with high credit scores, little debt, solid equity, and who shop around tend to find the lowest deals, The Mortgage Reports notes.
United Wholesale Mortgage, a residential mortgage lender, announced a 2.5% “Conquest” loan program for the 30-year, fixed- rate mortgage. “Some people said we’d never see interest rates drop below 3 percent on a 30-year mortgage,” says Mat Ishbia, United Wholesale Mortgage’s president and CEO. “We believe that the housing market is going to be strong, and we want to do our part to help more people get into their dream homes as we get through this pandemic together as a nation.”
Chase Bank followed suit by also offering mortgage rates below 3% on 30-year fixed-rate loans. Its offering for 30-year rates is as low as 2.875% (with a 2.944% APR).
Rates below 3% appear to be mostly reserved for purchase contracts and not refinancings, The Mortgage Reports notes. Refinance rates, for comparison, are falling in the 3.5% to 4% range.Source: “2.5% Mortgage Rates Are Here. What’s Next—2%? Or Even 1%?” The Mortgage Reports (May 18, 2020)
Record low mortgage rates are sticking around. The week ending May 14 marks the sixth consecutive week that mortgage rates have stayed at or near all-time lows. The 30-year fixed-rate averaged 3.28% this week, Freddie Mac reports.
“Mortgage rates have stabilized at very low levels over the last few weeks as homebuyer demand slowly improves,” says Sam Khater, Freddie Mac’s chief economist. “Although purchase applications reached a new low in mid-April, purchase demand today is only down 10% from one year ago. While demand is improving, inventory is low and declining with no signs of a turnaround yet.”
Home prices in the first quarter of the year were up in nearly all major U.S. cities, and despite the continuing difficulties of the COVID-19 pandemic, prices show no signs of slowing, according to the National Association of REALTORS®’ latest quarterly report.
The median price nationwide for an existing single-family home was $274,600 in the first quarter, a 7.7% increase year over year. “The first-quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of housing demand prior to the pandemic,” says NAR Chief Economist Lawrence Yun. “Even now, due to very limited listings, home prices are showing no signs of buckling.”