It's hard to escape the harsh reality that the coronavirus has cripple many industries. While the housing market was booming at the start of COVID-19, it has cooled off significantly. What could have been a historical spring buying season now looks to be a lot quieter that expected.
"As the calendar turned and the Federal Reserve made its first of two March interest rate cuts, mortgage rates reached record lows," according to a report from Zillow. "This sparked a historic flurry of refinance activity, which jumped as much as 79% in a week and 479% from a year earlier, prompting the Mortgage Bankers Association to double its forecast for refinance originations in 2020."
Then, mortgage rates began to climb, sparking confusion among market observers. Granted, rates are still low in comparison to recent years and are at attractive numbers for potential homebuyers. However, home buying has been sidelined by various state-issued recommendations for folks to stay in their residences, until the virus has been slowed to a manageable rate.
"One sign of analysts' reading of the market is Bank of America's ratings downgrade for some of the nation's largest home builders, suggesting the bank believes COVID-19 will harm consumer sentiment and slow home building," according to Zillow. "If correct, that dive in consumer sentiment would presumably slow sales activity regardless of mortgage rate movements as some would-be buyers turn down their risk tolerance and stay out of the market. Early data suggests this may be the case as real estate showings have dropped off steeply since March 11."
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