Weekly mortgage data continues to show home buyers flock in this COVID-19 market.
So what gives — why are people looking to buy a home during the worst financial crises in over a decade?
Let’s take a look at some clues to help support the reality of this market trend.
Home Buyers Are Attracted by Low Interest Rates
If you’re a current home owner, you are familiar with how low interest rates can make a good case to refinance.
Home buyers are also attracted by these low interest rates.
Spurred on by support from the Federal Reserve, the home mortgage interest rate environment is constantly hovering at all-time lows.
Excellent credit borrowers, who also have strong capital to leverage, could be looking at purchasing a new house with interest rates in the high-2% or low-3% range.
Government-backed loan programs, such as FHA (first-time home buyer) and VA (veterans and military), also take advantage of the low interest rates we see today.
So what is else supporting a home buyers flock in the COVID-19 market?
Pending Home Sales Data Got a Strong Boost Last Month
After one of the worst months in housing data history, the pending home sales category took a big leap in the month of May.
June’s data has yet to be published, but based on trends and weekly application data, it’s fair to assume the big boost in May is providing another strong boost in June.
Pending home sales data showing a strong recovery helps supplement the lack of new home construction – though that category is climbing as well.
More inventory is another strong explanation to why home buyers flock in this COVID-19 market.
Personal Cash Savings Hit All-Time Record
COVID-19 market woes mean potential home buyers are spending less money.
In fact, the U.S. Bureau of Economic Analysis released an eye-popping statistic in May; savings went up 33% in April.
The data was gathered on how much money is saved per paycheck by a wide array of American consumers. How does that translate to housing?
Well, if you’ve been saving for a home before the pandemic, then you’re incentive to spend less and save even more spiked in March. As the virus never really went away, many Americans continued to save money.
In July, we’re seeing home buyers flock in the COVID-19 market and it could be that many are finally prepared to handle the up-front costs associated with a new home purchase.
Will home buyers continue to flock in the weeks and months ahead? That remains uncertain, especially as COVID-19 cases spike to new all-time highs around the country.
If you’re looking to jump into a new home purchase, let Paramount Bank and our team of home buying experts assist your journey.