In the last six months, the number of mortgage applications received by lenders has steadily increased in the US. However, the figures show that the demand may be starting to slow, as the number of applications fell sharply last week to a six-month low.
Since the beginning of the COVID-19 pandemic, the demand in the housing market has soared. Consumers trying to purchase a home have found much higher competition than usual, as well as a steep rise in house prices across the country.
Now, a report by the Mortgage Bankers Association has found applications fell 3% in the last week, although it’s still 16% higher than the same week in 2019. Experts believe this is a sign that those thinking about buying a home have either gone ahead or decided to wait.
Competition is still intense
Even though there are signs of the market slowing, home buyers are still facing tough competition in 2020. There may be some bidding wars between buyers in the months ahead, but this may be as common as it was during the summer.
The National Association of Realtors (NAR) reported the median house price was $311,800 in September – this is nearly 15% higher than the same time last year.
Home prices have risen significantly in the last year, and this trend is continuing, as more people start working from home or being quarantined and need additional space. Additionally, fewer people are selling their properties, and this means a lack of homes available.
Another reason sellers may be setting higher asking prices is, according to the experts, the fact that the US now has record-low interest rates. When buyers pay less interest, they can afford to spend more and many sellers have chosen to take advantage of this change.
“Inadequate housing supply is putting upward pressure on home prices and is impacting affordability — especially for first-time buyers and lower-income buyers,” Joel Kan, an economist at the Mortgage Bankers Association, told CNBC.