Mortgage applications for home purchases – a proxy for demand – rose for a seventh consecutive week, climbing a seasonally adjusted 5% to close out the last full week of May. It would be tempting to brush off this data as evidence of how much demand disappeared during the lockdown rather than an indication of the housing market’s fundamental strength.
Home sales track closely with purchase applications, so there’s every reason to believe the housing market has already bottomed out.
That’s why the housing market could face more pressure from layoffs after the headline numbers have begun to stabilize and most of the 40 million Americans who have filed for unemployment insurance have gotten back to work.
And because this wave would affect white-collar workers – who do have high homeownership rates – the housing market could suffer a demand shock just as the overall employment situation appears to be looking up.