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Just How Strong Is The Housing Recovery?

The residential real estate market has definitely been the shining light in this country’s current economic situation. All-time low mortgage rates coupled with a new appreciation of what a home truly means has caused the housing market to push forward through this major health crisis.

Let’s look at two measures that explain the resilience of the real estate market.

Purchase Mortgages

The number of buyers getting a mortgage to purchase a home is a strong indicator of the strength of a housing market.

The number dropped dramatically in March and mid-April when the economy was shut down in response to the pandemic. It increased substantially from later in April through the middle of June. The strong increase in May and June was the result of the pent-up demand from earlier in the spring along with the normal business that would have been done during that time.

Since July, the market has remained consistent on a weekly basis, but still reflects a double-digit increase from the levels one year ago.  As reported by the Mortgage Bankers’ Association:

“The home purchase market remains a bright spot for the overall economy. Purchase applications were essentially unchanged but were 33 percent higher than a year ago – the 14th straight week of year-over-year gains. Mortgage rates at record lows and households looking for more space are driving this summer’s surge in demand.”

Pending Contracts

Like purchase mortgages, pending contracts are also a powerful indicator of the strength of the real estate market. 

Zillow reports each week on the percent change in the number of homes going into contract. The graph below shows a drop in early spring followed by a strong recovery in late spring and early summer. Then, in July, it settles into a consistent level of deals. That level, like the one for purchase mortgages, is well ahead of the level seen last year. The last report revealed that pending deals were up 16.5% than the same time last year.

Zillow Weekly Market Report August 22, 2020

For Connecticut Zillow reports the data from Hartford which is up 22.7% than the same time last year. Even though it’s not for the whole state it is still a good indicator on what the market is doing in Connecticut.

Hartford Weekly Market Report August 22, 2020

Both indicators prove the housing market recovered quickly from the early setback caused by the shelter-in-home orders. They also show that Americans have realized the importance of their homes during this time and are buying more houses than they did prior to the pandemic.

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