The Housing Headline
U.S. home buyers are coming back to the housing market faster than home sellers.
The News Behind The Housing Headline
After coronavirus-related delays through March and mid-April, home buyers are returning to the U.S. housing market.
Mortgage lenders recorded an increase in purchase mortgage applications for the third straight week last week, according to the Mortgage Bankers Association and its Weekly Mortgage Application Survey.
A purchase mortgage application is defined as a home buyer’s paper- or digitally-based credit application for a loan to buy a home.
Requests for purchase mortgages rose six percent last week and are now 21 percent higher as compared to the week ending April 17, 2020.
In the meanwhile, almost half as many homes were listed for sale in April as compared to last year. Realtor.com’s Monthly Housing Trends Report shows a 44 percent annual decrease in newly-listed properties.
Why This Housing News Matters To You
This week’s purchase mortgage applications data is another reason to believe that U.S. home prices won’t sink in this year’s recession.
Data from the National Association of REALTORS®, the Mortgage Bankers Association, and Altos Research, among others, shows that the number of home buyers nationwide is growing faster than the number of home sellers.
When demand for homes outpaces the supply of them, home values rise – regardless of whether the economy is in recession.
Recessions aren’t linked to home price growth.
- In the recession of 1980, home values rose 6.1%
- In the recession of 1981, home values rose 3.5%
- In the recession of 2001, home values rose 6.6%
And, in this year’s recession, it looks like values will rise again.
The typical U.S. home sells in less than 30 days, and the supply of homes nationwide would be exhausted in 3.4 months – a signal that we’re in a seller’s market.
Home buyers don’t have much leverage in today’s housing market. Thankfully, mortgage rates remain low.
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Today’s home buyers have 8 percent more purchasing power, and they’re asking mortgage lenders to approve more mortgage applications.