Key highlights from this report:
- What will the housing market be like during the summer of 2020?
- That’s one of the top questions we’ve received from our readers this momth.
- Recent reports suggest that we could see an increase in home-buying activity.
- Home buyers could have fewer properties to choose from this summer.
- Near-record-low mortgage rates will continue to lure buyers into the market.
With all of the economic uncertainty of the past few months, home buyers across the U.S. have a lot of questions. One of the most common questions we’ve received over the past couple of weeks is: What will the housing market be like in the summer of 2020?
We don’t know for certain. No one does. We’re in uncharted territory here, with the ongoing coronavirus (COVID-19) crisis. But recent reports and data suggest that we could see a significant increase in home-buying activity during the summer months.
Summer 2020 Housing Market: Are Buyers Gearing Up?
Late spring and early summer are usually the busiest months for the housing market. Weather has something to do with that. Also, a lot of home buyers try to time their purchases and moves to coincide with their children being out of school.
That’s typically how it works. But there’s nothing typical about where we are right now, as a country. Unemployment is soaring. Consumer confidence has tumbled. And government-issued shutdown orders have made it harder to conduct business.
Which begs the question: What will the summer 2020 housing market look like?
Surprisingly, we could see a rise in home-purchase activity as we move into summer. Recent reports from the Mortgage Bankers Association have shown a marked increase in the number of home loan applications. Also, a recent press release from Realtor.com showed a sharp increase in website activity among home shoppers.
Mortgage rates, meanwhile, continue to hover near record-low levels. Granted, low mortgage rates aren’t much of an incentive if you’re unemployed. But for those home buyers with steady income, those low rates are definitely a factor.
Realtor.com: Home Buying ‘Season’ Could Slide Into Summer
A recent report from Realtor.com® suggested that U.S. home buyers who put their property searches on hold in April are now resuming their searches. This is based on a recent analysis of traffic and behavior on the realtor.com website.
A May 18 press release from the company stated that “increased activity on realtor.com® suggests that home shoppers are gearing up for a later than usual homebuying season.”
In this case, “later than usual” means that more and more buyers could be shifting their home-buying plans into summer 2020. This development coincides with the gradual reopening we are seeing across the country.
Over the past few weeks, Realtor.com’s research team has noticed a significant increase in in the number of property views, saves and shares on their website. This trend suggests a rise in home-buyer demand, which could help fuel the housing market in summer 2020.
According to Danielle Hale, chief economist for Realtor.com:
“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.”
Here are some of the key trends they’ve seen since March 16, 2020:
- Listing views for single family homes and condos are up 30 percent;
- Saved homes are up 76 percent;
- Shared homes are up 95 percent; and
- Time spent per unique user is up 14 percent.
Home buyers also seem to be keeping a sharp eye out for price drops. In a recent survey of its users, Realtor.com found that 70% said that they registered on the site in order to “track price reductions and make a shortlist of homes.”
MBA: ‘Pent-Up Demand’ Is Being Released
Here’s another sign that the housing market could accelerate during the summer of 2020. More people have been applying for mortgage loans this month compared to last. Quite a few more, actually.
Recently, the Mortgage Bankers Association reported an 11% increase in home loan applications during the week ending on May 8, 2020, compared to the previous week.
Another recent industry report showed that “pent-up demand” among home buyers is now being released. This is another positive trend that bodes well for the California real estate market in summer 2020.
The Mortgage Bankers Association (MBA) reported that home purchase loan applications rose by 11% during the week ending on May 8, 2020 (compared to the previous week).
They too believe there is pent-up demand with the housing market, and that it could bring more home buyers into the real estate scene in summer 2020.
On May 14, MBA’s economic forecasting chief Joel Kan wrote:
“There’s evidence now that unrealized, pent-up [housing] demand is being released as states start to reopen. We expect that heading into the summer, more prospective home buyers will gradually return to the market.”
So here we have several reports and indicators that suggest the summer 2020 housing scene could bring more buyers and more deals. That would be good for the broader economy as well. In fact, the real estate market could help bring the rest of the U.S. economy out of a recession.
Trends to Watch Over the Coming Months
It’s an understatement to say that the coronavirus situation has slowed the housing market. In mid-April of this year, home sales ground to a near halt.
But that’s beginning to change. Real estate, mortgage and escrow companies have adapted their procedures to minimize face-to-face interaction. State and local governments are gradually loosening restrictions. And more home buyers seem to be entering the market.
So, what will the housing market be like in summer 2020? Here are five key trends to be aware of:
- Individual visits — You can forget about the traditional “open house.” At least for a while. Current guidelines for the real estate industry limit the number of people who can be present during a home showing. And that’s a good thing.
- Less competition — Mounting job losses and a general wariness about touring properties could keep some home buyers on the sidelines this summer. In that case, those buyers who do venture out could face less competition.
- More digital — From virtual tours to electronic document signing, the home-buying process has become more digital over the past few weeks. The industry was moving in that direction already. The COVID-19 situation just gave it a big push. In summer 2020, home buyers can expect a more digitized process with fewer in-person meetings.
- Fewer properties — You might think a slower real estate market would benefit buyers, by making sellers more eager to sell. That’s possible. But inventory reductions could level the field and even create bidding wars in some markets. Recent data from the National Association of REALTORS showed a nearly 20% drop in the number of homes for sale in April, compared to a year earlier. That marked the lowest April inventory level on record.
- Flattening prices — Some forecasters are predicting a major slowdown in home-price appreciation through summer 2020 and into early 2021. But such trends could vary greatly from one housing market to the next. Hot markets with more affordable prices could fare better, while expensive markets with fewer buyers could see price declines.
Disclaimer: This story contains forecasts and outlooks provided by third parties not associated with the Home Buying Institute. Those forward-looking views are the equivalent of an educated guess and should be treated as such.