The Summer Real Estate Market May Be Much Hotter Than Expected

An Unexpected Rebound

The prognosis for the housing market has not been great. Much like a pause button was pushed on the normally on-fire spring home buying season. But as states reopen their economies, the summer real estate market just might turn out to be hotter than anyone was anticipating. For the first time in more than two months, mortgage applications for home purchases were up year over year, rising an impressive 8.7% as buyers raced to lock in record-low mortgage rates in the week ending May 22.

According to Realtor.com Chief Economist Danielle Hale, “This is a bit of a bigger rebound than I expected. It’s a sign that we are going to see a delayed seasonal bump in home sales. There’s pent-up demand from buyers who weren’t able to get out in the early part of the spring, and we’re seeing that manifest now.”

Adjusting to a New Normal

March and April are strong months for sales, but amid the pandemic and widespread job losses, many buyers wanted to wait until they felt more secure in their jobs and until they could physically step into the homes they were considering. The recovery is bolstered as buyers become more comfortable with the “new” home buying process, taking precautions such as wearing masks and keeping social distance. Also, more sellers are listing their homes now that cities and states are loosening restrictions. And significant to the equation is that mortgage rates are ultralow.

The recovery has been uneven, and despite the encouraging national numbers, it’s likely too soon to declare a roaring comeback for the housing market. The inventory is still limited and many sellers have pulled their properties off the market or are holding off on listing their homes until the virus is under control and they can fetch top dollar for their residences. That can make it tough for buyers to find the right properties. “Sellers haven’t come back as quickly to the market as buyers have,” says Hale. “Buyers may be surprised by how competitive the market is.” This could result in higher prices this summer, as there will be more folks competing for homes than homes for sale.

Thank you to Clare Trapasso, senior news editor of realtor.com for her market insights.