“Record low interest rates are proving to be a powerful motivator and benefit for homebuyers in an otherwise challenging time,” says Mark Fleming, Chief Economist at First American. First American recently released its proprietary Potential Home Sales Model for the month of May 2020. Highlights of the report showed that potential existing-home sales increased to a 4.92 million seasonally adjusted annualized rate (SAAR), a 6.2% month-over-month increase. This represented a 46.5% increase from the market potential low point reached in February 1993. The market potential for existing-home sales decreased 7% compared with a year ago, a loss of nearly 368,120 (SAAR) sales.
“The early signs of a housing market comeback that appeared in mid-April, rising weekly purchase loan applications, continued to surge through May and into June. In fact, weekly purchase loan applications have now exceeded pre-pandemic levels,” Fleming said. “The two biggest drivers of the increase in May are slightly loosening credit standards, which allow more potential home buyers to qualify for financing, and the increase in house-buying power due to historically low interest rates,” he added.
Source: First American