The end of August typically marks a slower season for housing—but not this year.
The home shopping spree continues. Typically, the end of August sees a slowdown in the housing market, but this year, real estate has shown no signs of letting up.
Mortgage applications to purchase a home increased 3% last week compared to the previous week. But it’s the year-over-year jump of 40% that has surprised economists. Year-over-year comparisons are usually in the single digits.
“There continues to be resiliency in the purchase market,” says Joel Kan, economist for the Mortgage Bankers Association. “The average loan size continued to increase, hitting a survey high at $368,600. Highlighting the strong overall demand for buying a home, conventional, VA, and FHA purchase applications all increased last week.”
Record low mortgage rates continue to incentivize buyers. The average contract interest rate for the 30-year fixed-rate mortgage dropped to 3.07% last week, the Mortgage Bankers Association reports. The 15-year fixed-rate mortgage was at an all-time low of 2.62%.
Homeowners are rushing to refinance at the lower rates. Applications to refinance increased 3% last week and are a whopping 60% higher than a year ago, the MBA reports.
Source: “Mortgage Demand From Homebuyers Surges 40% From a Year Ago Amid Sales Spree,” CNBC (Sept. 9 2020)