If mortgage demand is an indicator, the housing market is starting to rebound a lot quicker than expected amidst the COVID-19 pandemic.
Home purchase mortgage applications rose 6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase volume was just 1.5% lower than a year ago, a remarkable recovery from only six weeks ago when purchase volume was down 35% year-over-year.
“Applications for home purchases continue to recover from April’s sizeable drop and have now increased for five consecutive weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. He continues, “Government purchase applications, which include FHA, VA, and USDA loans, are now 5% higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”
On the flip side, even with mortgage rates hovering near record lows, refinance applications slid to their lowest level in over a month. Kan indicated this might be the result of a retreat in cash-out refinance lending as credit conditions tighten. However, the expectation is that refinancing will continue to be strong the balance of the year due to the low rates.
Here in Idaho, mortgage lenders have seen consistent applications for new homes as high demand for homes here in the Gem State continues. With Idaho in the middle of Phase 2 of its four-phase reopening, REALTORS® are seeing more activity at open houses. “We just need more sellers,” says Mike Brown, owner of the Mike Brown Group at Silvercreek Realty Group. “There is so much demand for housing in our region that we don’t have the inventory to satisfy that demand.”
Movement Mortgage Senior Loan Officer Todd Shreeve says, “refinance applications have leveled some, although purchase applications have increased dramatically over the past couple of weeks.” He continues, “we are still seeing a lot of out of state buyers wanting to move here plus local buyers looking to upgrade before prices get too high.”
Joel Kan concludes, “As states gradually reopen and both home buyer and seller activity increases, we will be closely watching to see if these positive trends continue, or if they reflect shorter-term, pent-up demand.”
Time will only tell, but if the number of new purchase mortgage applications is any indication, it would seem the housing market is going to roar back to life.