Blog posted On June 19, 2020
Mortgage rates continue to hover around record lows, following the Federal Open Market Committee’s (FOMC) decision to leave interest rates unchanged. The National Association of Home Builders’ (NAHB) housing market sentiment index improved significantly in June, after a steep decline in April. Both new purchase and refinance mortgage application submissions increased. Housing starts and building permits rebounded in May after April’s declines.
Home builder sentiment rebounded in June, after a record fall earlier this year. Overall, sentiment climbed 21 points to a level of 58. Current sales conditions improved to 63, sales expectations for the next six months are up to 68, and buyer foot traffic jumped to 43. Any reading above 50 is considered positive. NAHB Chairman Dean Mon, explained, “as the nation reopens, housing is well-positioned to lead the economy forward. Inventory is tight, mortgage applications are increasing, interest rates are low, and confidence is rising.”
Both new purchase and refinance mortgage application submissions increased for the week ending 6/12. New purchase mortgage application submissions increased 4.0% and refinance mortgage application submissions increased 10.0% for a composite increase of 8.0%. Real estate experts expect buyer demand to continue into the summer, fueled by record low mortgage rates.
Housing starts and building permits also turned around in May, as cities and states reopen, and home buyers resume their home searches. Housing starts increased 4.3% month-over-month to a seasonally adjusted annual rate of 974,000. Building permits climbed 14.4% to a seasonally adjusted annual rate of 1.22 million. One of the biggest strains on the housing market before the coronavirus pandemic was a lack of available homes for sale. Home builders are likely ramping up to meet buyer demand.
Low mortgage rates continue to motivate home buyers and homeowners looking to refinance. If you’re planning to buy a home this summer, expect a crowded market and possible bidding wars depending on your location. Getting preapproved for a mortgage before you shop can help prepare you for a competitive market. Mortgage preapproval shows the seller that you’ve already started the mortgage process and can close on the home faster than a prospective buyer who has not gotten preapproved.