The latest mortgage data from April 2020 reveals that home buying activity in the US real estate market is recovering. This comes as many US states are slowly opening back up, allowing for economic activity to resume to some extent. A report from Mortgage Bankers Association (MBA) offers insight into the spring housing market 2020.
Mortgage Data April 2020: Home Buyers Are Back
Mortgage Bankers Association reported that in the last week of April, there was a 6% week-over-week (WoW) increase in mortgage applications for buying a home. In addition to this increase, purchase volume was up for the third week in a row. US real estate markets leading the growth in purchase volume were:
Still, the spring real estate market of 2020 is not in full recovery mode just yet. Home buying activity is still 19% lower than it was during the spring of 2019. Mike Fratantoni, MBA’s chief economist, notes, however, that this year-over-year decline is decreasing:
Although purchase activity remains almost 19 percent below year-ago levels, this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for home buying.
While it’s still too early to know for sure, the mortgage data on home buying activity appears to confirm a US housing market prediction that most experts had amid the coronavirus pandemic- the real estate market would recover due to pent-up demand. The US housing market was “frozen” in a sense and as states loosen COVID-19 restrictions, home buyers are slowly starting to return to take advantage of low mortgage rates. If this market trend continues, it’s unlikely we will see a full-blown housing market crash on the national level.
Refinancing Applications Dropped
The MBA’s index which measures total purchase and refinancing applications may have increased by 0.1% WoW, but refinancing activity actually dropped by 2%. There are a few possible reasons for this decline in refinancing applications in the US real estate market. In part, the massive job losses caused by the coronavirus pandemic make it difficult for homeowners affected to apply for refinancing. In addition to this, some mortgage lenders are offering higher refinance rates. Fratantoni shed some light on this:
Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac.
Still, the index measuring refinancing applications was 210% higher than it was the same time last year.
Ready to Get Back into the US Housing Market 2020?
As home buying activity picks up, real estate investors may also be wondering if now is a good time to invest in real estate. With low mortgage rates and an ease in coronavirus restrictions in some states, many investors are already on the hunt for real estate deals. If you want to start your search for investment property for sale today, do so with Mashvisor. Enjoy 15% off if you sign up now.
Sign up now to Mashvisor to stay updated on real estate news around the US.