As states reopen, buyers are reemerging faster than expected, proving market resiliency against the COVID-19 pandemic. Applications to purchase a home posted their fourth consecutive weekly increase, rising 11% last week, the Mortgage Bankers Associations reported Wednesday.
Applications are still 10% lower than a year ago but the annual loss continues to shrink each week. For example, last week’s purchase volume was down 19% annually. A month ago, purchase volume was down 35% compared to a year earlier.
“There continues to be a stark recovery in purchase applications, as most large states saw increases in activity last week,” says Joel Kan, MBA economist. “We expect this positive purchase trend to continue—at varying rates across the country—as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring homebuying season.”
Among the 10 largest states that the MBA tracked in its mortgage application survey, New York led purchase demand with a 14% increase in applications. Other states posting double-digit increases last week were Illinois, Florida, Georgia, California, and North Carolina.
Mortgage rates remain near historical lows, which offers buyers a chance to lock in record low rates. The MBA reports that the average contract interest rate for a 30-year fixed-rate mortgage was 3.43% last week.
Meanwhile, mortgage applications for refinancings are diverging, dropping another 3% last week, the fourth consecutive week for declines. Lenders reportedly are not offering the same low rates on refinances as they are for home purchase applications. Still, refinance applications remain 201% higher than a year ago.
Source: “Mortgage Applications From Buyers Jump 11%, Signaling the Spring Housing Market May Not Be a Total Loss,” CNBC (May 13, 2020)
