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Home Mortgage Applications Soar into the New Year

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2020 has been good to the home mortgage industry so far.  According to an article published last week by CNBC.com, “Total mortgage application volume surged 30.2% last week from the previous week”.  Mortgage companies not only saw an influx of refinance applications, but also an unseasonably high number of home purchase applications.

Interest rates dropped to the lowest level since fall of 2019 and, as a result, refinance applications surged.  In fact, according to the article written by Diana Olick, “Those applications jumped 43% for the week and were 109% higher than a year ago. The refinance share of mortgage activity increased to 62.9% of total applications from 58.9% the previous week.”

However, home purchase applications pulled in some impressive numbers, especially considering the housing market typically doesn’t pick up until February.  The volume of home purchase applications came in at the highest tally since October of 2009. 

Unfortunately, this high demand for homes is met with a very low supply of homes. With a continued supply and demand mismatch, prices could soar and leave some prospective home buyers priced out of the market.

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Photo Credit: Gerd Altmann

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Disappointing Sales Figures for New Homes Reported

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In many parts of the U.S., sales of new homes continued to have a downward trend in February, falling .6 percent from January.  This, according to an article published by CNBC, is the third month in a row that the sales of new homes dropped.

In the article, the details of regional new home sales were provided.  Bringing the U.S. average down were the Midwest with a 3.7 percent decrease in sales as well as the west, with a drop of almost 18 percent.  The south and northeast regions of the U.S., however, saw increases in new home sales of 19.4 percent and 9 percent respectively.

An overall slow-down in sales is being attributed to a shortage of homes, specifically lower priced homes.  As a result, the prices are being driven up, the median price of new homes is up almost 10 percent from last year.  Couple this with rising mortgage interest rates, many first time homebuyers may have a difficult time entering the real estate market.

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