Buyer demand continued to swell as July began, even as coronavirus cases continue to swell against a backdrop of simmering social tension.
After a staggering surge in May and a strong June, purchase applications rose again to start the month of July, up nearly 33% from a year ago.
Sales in the new home market are particularly robust. while the official government count isn’t out until the end of the month, one national survey estimates sales of newly built homes jumped 55% annually in June, the highest pace of growth since 2005.
This boom appears to be driven by the pandemic. Shoppers who put off looking for a new home until the health crisis cooled are now being joined by new shoppers looking to take advantage of low mortgage rates. Rates continued to tumble ever lower as 2020 passed the midpoint in early July.
Sellers are starting to respond. Total listings in some areas crept within 15% of the number of homes for sale June 2019. But even then, the market is struggling to catch up with surging demand.
Asking prices were up 9.9%, compared to 7.9% the week before. Agents across the country reported bidding wars on more than half of all sales. Escalator clauses, waiving inspections and agreements to pay over appraised value is the norm. The average purchase loan size increased to a record high of $365,700.
With the flexibility to work remotely, many buyers are pursuing the suburbs or smaller cities. Many urban renters are looking to buy in these more affordable suburban areas.
While public health officials still recommend social distancing and wearing masks in public, 65% of home shoppers who attended an open house within the last year say they would also do so now without hesitation, according to recent survey data released by the National Association of Realtors (NAR).
Even as shelter-in-place rules subside in parts of the country, virtual tours remain popular. Fifteen percent of tours are happening via video - half of its April peak - but still 30 times higher than pre-pandemic.
Taken together, analysts believe the needle may finally move upward on the U.S. home ownership rate, which has mostly languished below 65% since hitting an all-time high of 69.2% in 2004.
At Bay Equity Home Loans, we embrace the unique paths homeowners take to realize their dream. Call us today for your home loan needs.