Low mortgage rates haven’t been enough to counter the devastating effect of the coronavirus pandemic on the U.S. housing market.
”The U.S. housing market has entered truly uncharted territory, shaken by the COVID-19 pandemic and a corresponding, sharp economic contraction that has already caused millions of Americans to lose their jobs,” says Jeff Tucker, an economist at Zillow, in a statement. “Rock-bottom mortgage rates have provided some small financial relief for homeowners and buyers, but it hasn’t been enough to avoid a slowdown.
“The big question at the moment is to what degree measures being taken by local, state and national legislators will help limit the number of foreclosures in the months ahead,” Tucker says.
NAR’s early data shows that real estate showings have dropped off steeply since March 11.
What’s more, recent ratings downgrades for some of the nation’s largest homebuilders, as a result of the economic impact of the virus, indicate that home construction will slow.
In the months to come, refinance activity could continue to outpace purchase activity, particularly if rates drop back to their earlier lows.
But total volume is expected to drop.
“In a typical market, low mortgage rates would be expected to continue to boost demand,” Zillow says. “But today’s market is, of course, anything but typical…”
The Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, and the U.S. Department of Housing and Urban Development/Federal Housing Administration have respectively announced 60-day moratoriums on foreclosures and evictions for borrowers. Borrowers who are financially impacted by COVID-19 are urged to contact their mortgage servicer to discuss forbearance plans and other options.