Some areas of housing are actually doing better than they were before the coronavirus began sweeping the U.S.
The U.S. housing market, the epicenter of the nation’s last economic meltdown, is thriving — and that’s helping to keep the country afloat during the latest crisis, even as other industries struggle to survive.
While the $34 trillion market faltered at the start of the pandemic, its rebound has far outperformed expectations, with existing home sales surging over 20 percent in June, according to data released Wednesday. Some areas of housing are actually doing better than they were before the coronavirus began sweeping the U.S.
The reason: The market’s already enormously pent-up demand has been stoked by the crisis, despite soaring unemployment. White-collar employees — many of whom are able to work from home and keep getting paychecks — are buying. And analysts believe the pandemic has prompted some millennials, now reaching the prime age for buying first homes, to pull up stakes in crowded cities and head for the suburbs. Securing a home loan, meanwhile, is cheaper than ever, with mortgage rates hitting historic lows thanks to the Federal Reserve’s easy-money policy.
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To be sure, that could change quickly as more states are forced to go back into lockdown amid a resurgence of the virus. Already, the regions where housing has been strongest — a staggering 47 percent of existing home sales in June were in the South, according to the National Association of Realtors — are now facing significant new outbreaks.
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Consider: Home construction jumped 17 percent in June, according to Census Bureau data, while permit applications to build single-family homes rose almost 12 percent. And mortgage applications were up 19 percent in the week ending July 17 over a year ago.
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Historically low mortgage interest rates — the average rate fell below 3 percent last week for the first time since Freddie Mac began tracking it in 1971 — have also nudged would-be homeowners off the fence. And the increased time people are spending at home amid widespread lockdowns has led plenty of people to reevaluate their living spaces.
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That has led to a boost in demand for new homes with more space for remote working and remote learning. While the resale market is still lagging, new-home sales in May were up 16.6 percent from the previous month and 12.7 percent over May 2019.
If anything, the pandemic appears to be accelerating white-collar 30-somethings’ transition from cramped apartments in crowded urban centers to more isolated single-family homes in the suburbs.
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Almost a quarter of the respondents to a National Association of Realtors survey of its members in late June said they had buyers who had shifted the location of where they wanted to buy a home because of the pandemic. Of those, 47 percent said their buyers want to purchase a house in the suburbs and 39 percent said buyers wanted to move to a rural area. Others indicated buyers shifted to wanting a home in a small town.
Home prices, meanwhile, continue to rise, as demand continues to outstrip the nation’s already strained housing supply.
Still, the dramatic surge in demand as states began to reopen in May and June that is just now showing up in housing data may be short-lived.
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In fact, the market may have peaked already, given the recrudescence of the virus around the country.
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The U.S. housing market is thriving — and that's helping to keep the country afloat during the latest crisis, even as other industries struggle to survivehttps://t.co/YWIvlBzTeL
— POLITICO (@politico) July 23, 2020
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