AEI housing market indicators, July 2020

Slides · Methodology

The American Enterprise Institute’s Housing Center released its monthly update to the AEI Housing Market Indicators on July 1st, 2020.

This month’s main takeaways include:

  • Week 26 continues weeks’ 21-25 strong upward trend, with purchase lock volume for the week of Jun 20 (week 26) up 42 percent from a year ago, providing further evidence that the worst of the near-term effects of the COVID-19 pandemic lockdown may be behind us.
    • Over the past six weeks, the market has not only returned to normalcy, but is up substantially from weeks 14-18 when the average weekly year-over-year decline was 15 percent.
    • As a result of the last six weeks’ strong purchase lock volume, combined with strong volume in weeks 1-13, year-to-date volume is now running a robust 16 percent ahead of last year.
  • Americans on the Move
    • When broken out by density, across the nation, the least dense ZIP codes grew at almost twice the rate of the densest ones.
    • This pattern also holds within the majority of the largest CSAs with New York, Los Angeles, San Francisco, Seattle, and Washington, DC all experiencing pronounced shifts.
    • If these recent pandemic-related trends continue, they will fuel significant demand and supply shifts at the regional, state, urban/rural, metro, and intra-metro levels.
    • ZIP codes which traditionally have high vacation home shares have far outpaced the rest of the purchase rate lock market over the last six weeks.
  • At the metro level, metros that experienced strong tailwinds before the pandemic are experiencing the same strong tailwinds again.
    • Geographic areas less affected by the pandemic and which are reopening more rapidly will benefit from more favorable economic tailwinds. These are largely metros in the South and Southwest that were already doing well pre-pandemic.
    • Metros in the West, Northeast, and Midwest that take longer to safely reopen will face economic headwinds.
  • National home price appreciation (HPA) stood at 7.9 percent — its highest rate since the beginning of 2019.

The AEI Housing Market Indicators provide accurate and timely metrics for the housing market. These include Mortgage Risk/Leverage (with a particular focus on agency first-time buyer volume and risk), house prices and appreciation trends, housing sales (new and existing sales whether institutionally financed, cash, and other-financed), and inventory levels. Since the housing market is influenced by many different factors, all need to be considered together to better understand market trends.

Please find materials from our monthly call below. If you would like to receive invitations to our monthly update calls, please email [email protected]. For data on mortgage risk, please use our Mortgage Risk Index Interactive.

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