August Market Update
As the coronavirus numbers keep rising, a seller's market continues to dominate the home market. The pace of home sales has recovered with inventory moving faster than this time last year – but supply remains the critical missing piece in the recovery. Another few months of sustained growth are needed to make up for lost ground in the first half of the year. However, low housing inventory and low mortgage rates are currently helping to keep the market stable for now.
US Weekly Average Rates as of 8/13 - Freddie Mac
Week of 8/13
1 Year Ago
4 Weeks Ago
30 Year Fixed-Rate Mortgage
15-Year Fixed-Rate Mortgage
For the fifth time this year, rates have hit record lows. The average U.S. mortgage rate falls below 3% for the first time in July, the lowest in almost five decades of data. There shouldn't be any surprises from the Fed in the coming weeks on account of a need for economic recovery post-coronavirus, but it's most likely that rates will be staying low into the near future.
Pending Home Sales increased
- According to the National Association of Realtors®, Pending Home Sales increased 16.6% in June for the second straight month.
- Surge driven by three factors:
- The cheapest mortgages ever
- Millennials hitting their 30s and wanting to settle down
- City-dwellers suddenly wanting more – and less expensive – space as the pandemic forces families to spend more time at home
Competition soars, prices follow
- New listings down 5% compared to 07/2019 (low inventory), not rising as fast as new contract signings.
- Properties typically on the market for 60 days; 62% of homes sold in June were on the market for <30 days.
- The median listing price for a home for sale in the US in June 2020 was $295,300, up 3.5% YoY. June’s increase marks 100 straight months of YoY gains.
Mortgage applications continue to go up
- Mortgage applications for home purchases are up nearly 20% YoY to the highest level in over a decade
- Potential reason could be how low rates are providing an extra $100 to $300 of saved monthly housing costs for people who are able to buy a home or refinance.
Greatest threat still unemployment
- A family needs less income today to affordably pay a mortgage compared to 07/2019.
- Record low unemployment to record highs in a matter of months.
- Unemployment rate improved to 10.2% in July, from 11.1% in June
- Average-hourly earnings, jumped by .2% after a dismal -1.3% change in June
- Resurgence of virus could further increase unemployment, creating a barrier for potential homebuyers.
Luxury home prices in decline, could rebound
- Luxury home pricesdropped 2.3% YoY in June, marking one of the biggest declines in luxury home prices since the beginning of 2015.
- Median price for luxury home is $1,099,521
- Latest data shows the luxury market may be starting to rebound, but could recover more slowly than the rest of the housing market.
Updates for self-employed borrowers
- Investors are now requiring additional documentation for Self-Employed Borrowers.
- Additional documentation to show up-to-date profitability and support stability of income of their companies.
- For guidelines and FAQs, visit our resource page.
Sellers are in a great place, but the competitive market and resurgence of the virus makes it difficult for buyers, especially among those who are eager to move. Markets with superior COVID-19 containment and economic resilience have proven to be better positioned to withstand the bumpy road ahead. But with existing home sales looking positive, recovery is only a matter of time.
Check today's mortgage rates.
Savings, if any, vary based on consumer credit profile, interest rate availability, and other factors.