There’s new evidence that today’s low mortgage rates are getting the cogs turning for consumers, and what individuals decide to do with their money amid COVID-19 uncertainty can determine the fate of both the US housing market and economy.
Economists often talk about the difference between hard and soft data:
Hard data can be defined as concrete facts, like how many jobs were created or how many homes sold.
Soft data is usually sentiment-driven, like consumer confidence.
The problem in today’s economy is that most sources of both hard and soft data are lagging. For example, this morning’s release about the labor market means virtually nothing because the stats were captured before COVID-19 fears really started to take off.
Enter: Google, a great provider of real-time soft data. We’ve written in the past about how Google search activity captured the housing slowdown in mid-2018 almost to the day. Google searches this week for “Should I Buy A House” reached the highest level since 2004, the first year this data was available. Googling about the housing market typically spikes in March, coinciding with the spring selling season, but this year reached a new level.
So what does it mean? There’s no good way to tell for sure yet. We do know that interest in the housing market is up, fueled by the lowest mortgage rates on record, and rate lock data from Optimal Blue shows buyers that were already actively shopping have stayed the course despite the stock market volatility. Their data shows that daily purchase volume from Monday, Tuesday, and Wednesday of this week was 28% higher than the same period of last week*.
Moving forward, we, as an industry, are holding our breaths to see what prevails: low mortgage rates or fear.