The Housing Market Heats Up as More Americans Return to Work

After a rough spring, the economy is looking up this summer, as nearly 5 million Americans went back to work in June. That’s likely to provide another jolt to the already hot housing market.

The nation’s unemployment rate dropped to 11.3% in June, according to the U.S. Bureau of Labor Statistics. While that’s higher than in the worst stretch of the Great Recession, it’s an improvement over the 14.7% of workers who sought unemployment benefits in April, followed by 13.3% in May.

“We’re moving in the right direction. But the unemployment rate is really high,” says® Chief Economist Danielle Hale.

Plus, the numbers don’t tell the whole story. Many workers laid off as a result of the coronavirus pandemic have had trouble filing for unemployment benefits and getting approved. And as city and state recoveries are thwarted by a record new number of positive COVID-19 cases, some workers who had been called back to their jobs are back in the unemployment line.

However, higher-earning professionals haven’t been as affected by the pandemic-related layoffs as lower-income workers in the retail and tourism and hospitality industries. These white-collar workers, who may be seeking more space after being confined to their homes for months on end, are more likely to have the funds to purchase a home.

“Buyers are still out shopping for homes, which suggests they think [the recession] is a temporary blip,” says Hale. “Generally, when we’ve seen unemployment rise, it tends to slow down home purchases. But that’s not what we’ve seen this time, [although] we did see home sales drop as people were stuck at home.”

All the economic turbulence has led to record-low mortgage interest rates. Those may be spurring some skittish buyers worried about the economy into the home-buying market. Rates reached an all-time low of just 3.07% for a 30-year fixed-rate loan in the week ending July 2, according to Freddie Mac.

Those ultralow rates, which can potentially shave more than a hundred dollars off a monthly mortgage payment and tens of thousands of dollars over the life a loan, may help to explain why mortgage applications to purchase a home surged. They shot up 18.1% annually in the week ending June 19, according to the Mortgage Bankers Association. That means there were nearly one-fifth more folks looking to buy a home in mid-June than there were during the same week last year, before the pandemic and recession.

Meanwhile, the number of homes on the market has fallen drastically. There were 27.4% fewer properties for sale in June compared with last year. That’s spurred bidding wars, all-cash offers, and price spikes.

Median home list prices increased 5.1% year…

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