A weekly gauge of home buyer interest ticked up for the third week in a row—a sign of “pent-up demand for home buying,” according to the organization that administers the survey.
The Mortgage Bankers Association’s Purchase Index, which measures the weekly volume of applications for loans to buy a home, rose 6% on a seasonally-adjusted basis and 7% on an unadjusted basis for the week ending May 1. In a news release, MBA chief economist Mike Fratantoni credited that week-over-week increase to “strong growth in Arizona, Texas and California,” which posted increases of 11%, 10.3% and 10.1%, respectively.
With state lockdowns only beginning to be eased, much is still unknown about how an economic recovery from the coronavirus crisis will take shape. But a third week-over-week increase in loan applications is a positive sign for the housing market. The survey is a regular pulse-check of buyer interest in residential real estate—and for much of March and April it was falling.
Home-purchase applications began dropping in mid-March as the virus—and the lockdown policies meant to hinder its spread—began sidelining much of the U.S. workforce and subduing consumer spending. The Mortgage Banker Association poll wasn’t the only one showing a dip in home buyer interest at the start of the housing market’s normally busy spring season. In a survey by the National Association of Realtors in early April, 90% of members said buyer interest had dropped, while Fannie Mae’s Home Purchase Sentiment Index, which measures Americans’ outlooks on job security and buying and selling homes, experienced its greatest month-over-month decline since the index began.
While the Mortgage Banker’s index has been reporting week-over-week increases since mid-April, purchase application volume is still lower than it was at the same time last year. Purchase activity is down 19% from a year earlier, Fratantoni noted, but “this annualized deficit has decreased as more states reopen amidst the apparent, pent-up demand for home buying,” he said in the release.
Of the three states with strong growth that Fratantoni cited, Texas’s loan-application volume is the closest to 2019 levels, falling only 4.2% below the same week last year.