Acknowledging that mortgage activity was significantly lower at the end of April than it was the prior year, the Mortgage Bankers Association believes there is “pent-up demand for homebuying” as officials begin the process of opening the economy following the COVID-19 pandemic.
MBA’s Weekly Mortgage Applications Survey found applications increased just 0.1% as of May 1, while the Refinance Index decreased 2%. The Purchase Index, although down 19% from the end of April 2019, was up 6% in the week ending May 1.
“Purchase volume increased for the third week in a row, led by strong growth in Arizona, Texas and California. Although purchase activity remains almost 19% below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for homebuying,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement.
The pandemic forced many consumers to hit pause on big-ticket purchases, but research from the National Association of Realtors indicates home sellers are confident about demand for their homes once stay-at-home orders are lifted.
NAR found 76% of home sellers haven’t reduced listing prices, and 73% are prepared to sell their homes when the economy opens up again.
“Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years,” Lawrence Yun, NAR’s chief economist, said in a statement.
The pandemic has forced consumers to look at homes in new ways. NAR found 5% of its members have clients who are now looking at suburban locations over urban properties, and 13% have changed their priorities about features their new home should have. The most common is a home office, but consumers also want a yard “for exercising or growing food,” and enough room for their families.
Danielle Andrus was previously the managing editor for Colorado Builder, and is currently Editor for the Journal of Financial Planning.