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The
Mortgage Bankers Association (MBA) said on Wednesday its
seasonally adjusted Purchase Index increased 8.6% from a week
earlier. On an unadjusted basis, the index rose 7.4% from the
prior week and was 9% higher compared to the same week a year
ago. It was the sixth consecutive weekly gain and a 54% surge
since early April.
"The home purchase market continued its path to recovery as
various states reopen, leading to more buyers resuming their
home search," said Joel Kan, MBA's associate vice president of
economic and industry forecasting. "The purchase loan amount has
increased steadily in recent weeks and is now at its highest
level since mid-March."
The sustained gains in mortgage applications suggest a jump in
first-time buyers of both new and previously owned homes in
April was probably not a fluke. Homebuilder sentiment also
improved in May.
The housing market has a giant footprint on the economy, which
contracted at its deepest pace in the first quarter since the
Great Recession and lost at least 21.4 million jobs in March and
April as states and local governments took drastic measures to
slow the spread of COVID-19, the respiratory illness caused by
the virus. Rising demand for home loans offers hope the economic
slump is close to bottoming as businesses reopen.
"While there could remain downward pressures on housing demand
overall this year from still-high unemployment, we would not be
surprised to see a potential overshoot of pre-COVID level of
housing demand if temporarily postponed activity resumes in the
coming months," said Veronica Clark, an economist at Citigroup
in New York.
(Reporting by Lucia Mutikani; Editing by Leslie Adler)
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