AEI housing market indicators, July 29, 2020

Slides · Methodology

The American Enterprise Institute’s Housing Center released its monthly update to the AEI Housing Market Indicators on July 29th, 2020.

This month’s main takeaways include:

  • Week 30 continues the past two months’ strong upward trend, with purchase lock volume for the week of July 18 (week 30) up 39 percent from a year ago. It appears that the worst effects of the COVID-19 pandemic lockdown on housing demand may be behind us.
    • Over the past 10 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 weeks’ strong purchase lock volume, combined with strong volume in weeks 1-13, year-to-date volume is now running a robust 21 percent ahead of last year.
    • Driven by the lowest mortgage rates in history, cash-out refinance activity continues to run well above its 2019 level. Year-to-date, volume is 91 percent higher than in 2019.
  • 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.
  • Preliminary national rate of Home Price Appreciation (HPA) for June 2020 was 7.2 percent. HPA has reached a peak for the year and is up from 4.8 percent in June 2019.
    • Optimal Blue data indicate that the rate of HPA will further accelerate over the coming month. HPA for week 30 stood at 9.8 percent — its highest rate since the beginning of 2019.
    • With very few exceptions, YoY HPA in the low tier hasn’t changed between June 2020 and 2019. However, when compared to June 2013, generally the metros that experienced faster HPA then, are appreciating less rapidly today.

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.