Low Mortgage Rates Convert Prospective Buyers into Active Buyers

Of the 11 percent of American adults considering a future home purchase in the second quarter of 2020, about half (49 percent) are not simply planning it, they are actively engaged in the process to find a home. That is a significantly higher share than the comparable figure a year ago (41 percent), which suggests that the COVID-19 crisis and its accompanying record-low mortgage rates have converted some prospective buyers into active buyers.Of Millennials planning a home purchase in the next year, 57 percent are already actively searching for a home. Among Boomers, that share is only 37 percent. Across regions, prospective buyers in the Northeast are the most likely to be actively engaged in the purchase process (57 percent), compared to 44 percent in the Midwest, 45  percent in the West, and 50 percent in the South.

The timing of the data collection for this report (June 16-28) is important, as results need to be interpreted in the larger context of the US economy and the trajectory of new case counts at the time. In June, the labor market showed signs of recovery, gaining 4.8 million jobs and a lower unemployment rate. The 30-year fixed mortgage rate continued to fall, reaching 3.13% by the last week of the month. The number of COVID cases nationally were stable through the first half of the month, only beginning their ascent around June 15.   For these reasons, we assess that responses in this quarter’s report reflect a period when workers were returning to their jobs, mortgage rates looked increasingly attractive, and the pace of new cases had only recently started to regain speed.