Tracking the Reopening: US Mortgage Applications Rebound
With Massachusetts and Connecticut partially reopening this week after the pandemic-related lockdowns, all 50 states in the US have more or less begun the process of jumpstarting their economies. Tracking the Reopening series intends to map and analyze the nascent datapoints that are emerging from the US and elsewhere in the wake of such reopenings.
While debates rage on regarding the ultimate shape of the broader economic recovery in the United States, there is at least one indicator that points to a possible V-shaped recovery. Mortgage applications, which were down as much as 35% YoY several weeks ago, have since rebounded so strongly that they are now a mere 1.6% lower than a year earlier. That this rebound occurred despite the surging unemployment rate is one of the several data incongruences that support our more positive macro view relative to consensus estimates.
Lower mortgage interest rates are no doubt a powerful incentive, but that would not be enough of an enticement if consumers were truly worried about the longer-term economic outlook. The data aligns with recent homebuilder comments as well, indicating a better-than-anticipated housing demand recovery. We are also intrigued by the National Multifamily Housing Council data that track 11.4 million apartment units. The data show that 87.7% of tenants have made at least partial rental payments through 13 May, which is just 2.1 percentage points lower compared with the 2019 period and 2.7 percentage points better than in April. At the very least, there is some encouraging resilience here!
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