According to the Mortgage Bankers Association applications for home purchases increased for the fifth consecutive week This Week in Real Estate, while Wall Street also experienced significant rallies. The S&P 500 reached a two-month high and the Nasdaq finished at its highest close in three months. Below are a few newsworthy events from the third week of May that influence our business:
Weekly Mortgage Applications Point to a Remarkable Recovery in Homebuying. If mortgage demand is an indicator, buyers are coming back to the housing market far faster than anticipated, despite coronavirus shutdowns and job losses. Mortgage applications to purchase a home rose 6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase volume was just 1.5% lower than a year ago, a rather stunning recovery from just six weeks ago, when purchase volume was down 35% annually. “Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks,” said Joel Kan, an MBA economist.
Wall Street Climbs on Stimulus Hopes, as S&P, Nasdaq Hit Multi-Month Highs. The three major averages on Wall St. notched their fourth gain in five sessions on Wednesday as investors again bet on a swift economic recovery from coronavirus-driven lockdowns and the potential for more stimulus measures from the Federal Reserve. The S&P 500 stands at a two-month high and was briefly above its 100-day moving average, a closely watched technical indicator that has acted as a resistance level. The Nasdaq finished at its highest close in three months and was 4.5% below its Feb. 19 record close, as shares of Facebook Inc and Amazon.com Inc surged to all-time highs. Gains were broad-based, with each of the 11 major S&P sectors turning higher. The small-cap Russell 2000 index, which usually leads gains out of a recession, outperformed the large-cap indexes.
Homebuilder Confidence Rebounds in May From Historic Decline as Industry Grows Optimistic About Post-Pandemic Home Sales. Confidence among home builders has recovered somewhat after last month’s record-breaking decline even as much of the country remains under stay-at-home orders because of the coronavirus pandemic. The National Association of Home Builders’ monthly confidence index rose seven points to a reading of 37 in May, the trade group said Monday. The indicator that measures current sales conditions increased six points to 42, while the component that gauges sales expectations in the next six months jumped 10 points to 46. The index that follows traffic of prospective buyers rose eight points to 21. Regionally, the West posted the largest gain, increasing 12 points. “Data suggests that home shoppers who had paused their search are now picking it back up, and the spring homebuying season won’t be lost, but merely pushed into the summer months,” said Danielle Hale, chief economist at Realtor.com. Home-search activity has also recovered, with listing views for single family homes and condos up 30 percent, per Realtor.com.