The Mortgage Banker Association’s latest weekly survey indicated a slight drop in mortgage applications of 0.7% for the week ending October 9, 2020. Applications for both refinancing as well as home purchases dropped from the previous week. Compared to the same week from last year, refinancing applications were still up 44% and purchase applications were up 24%, respectively.
Despite this modest dip and current supply, the MBA maintains a positive outlook for the market. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, shared the following:
“Mortgage applications for refinances and home purchases both decreased slightly last week, despite the 30-year fixed mortgage rate declining to a new MBA survey low of 3.00 percent. Applications for government mortgages offset some of the overall decline by increasing 3 percent, driven by a solid gain in government purchase applications and an 11 percent jump in VA refinance applications…Refinance and purchase activity continue to run well ahead of last year’s pace, fueled by record-low rates and strong homebuyer demand. Housing supply is a challenge for many aspiring buyers, but activity should continue to stay strong the rest of the year.”
The Inventory Challenge
Purchaser demand is so high, the market is running out of available homes for sale. In late September, realtor.com reported:
“Since the beginning of the COVID pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory.”
The National Association of Realtors (NAR) revealed that, while home sales are skyrocketing, the inventory of existing homes for sale is dropping dramatically. Below is a graph of existing inventory (September numbers are not yet available):
Homebuilders are increasing construction, but they cannot keep up with the high demand. Bill McBride, founder of the Calculated Risk blog, in discussing inventory of newly constructed houses, notes:
“The months of supply decreased to 3.3 months…This is the all-time record low months of supply.”
Bottom Line
As the market continues to cross new thresholds and buyer demand maintains high, connect with your sellers to capitalize on the hot market by setting a competitive price.
