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Despite early expectations, the housing market is showing signs of strength in the pandemic. Home sales are now higher than they were pre-COVID, and Lawrence Yun, chief economist of the National Association of Realtors® (NAR), has said that the “housing market is well past the recovery phase.” Several other trends have also gained traction, benefiting homeowners and homebuyers alike. Here’s a quick look at 5.
1. Mortgage rates have hit multiple record lows
Mortgage rates are always top of mind in the housing market, and there’s been plenty of reason to keep them there. In July, the 30-year fixed mortgage rate slipped below 3% for the first time since Freddie Mac started tracking it in 1971. By early August, it had hit 8 new record lows since the start of the year, by Business Insider’s count. And in September, it hit yet another all-time low—2.86%! This rate environment may be something to watch for years. The Federal Reserve signaled it may try to keep interest rates low until 2023.
2. Refinances have helped millions of homeowners lower their mortgage costs
As a result of the pandemic’s low rates, refinances rose to a record high during the second quarter of the year and experts say the streak isn’t over. Following the 30-year fixed rate’s drop to 2.86%, mortgage data firm Black Knight suggested 19.3 million homeowners could save an average of $299 per month by refinancing.
3. Median mortgage payments have rivaled rent—at times
Low mortgage rates have also kept some homebuyers’ mortgage payments down. NAR reported that the median 30-year fixed rate mortgage payment was less than the median rent as of July 16. This trend may benefit some city dwellers who are looking to move to the suburbs in the pandemic.
4. Home prices have gone up, but that hasn’t stopped buyers
In comparison, the median price for a home hit an all-time high in July—$304,100. This was the first time the price went above $300,000 and it was fueled, in part, by low housing inventories. The rise stands to benefit homeowners selling their houses, but also hasn’t deterred millions of homebuyers. Buyers boosted existing-home sales up 24.7% in July compared to June. One reason these sales may be staying strong is people’s changing real estate needs. NAR’s Yun points to an increased need for home offices, for example.
5. Home improvement spending is up
Of course, everyone isn’t buying. Some people have had the ability to upgrade their homes after spending extra time in them. Home improvement stores’ sales, and interest in remodeling and pools, have all jumped.
Bonus trend: Fewer homeowners are in forbearance
Mortgage forbearance has also seen some promising developments in the pandemic. Forbearance rates hit their lowest levels in almost 5 months in late August, according to data cited by HousingWire. (Should you need it, our COVID-19 mortgage assistance is also still available. Learn more here.)
So, how’s the housing market been doing in the pandemic? Better than expected thanks to some record-breaking trends. If you’re ready to capitalize on them, click here to learn about your options with Mr. Cooper.
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