The breadth of the recovery is impressive with consumer spending picking up, unemployment claims dipping below 1 million for the second consecutive month, industrial production, small businesses more optimistic, and buyer demand continuing to accelerate into September when the buying season is typically winding down. However, the economic bag has also grown more mixed of late as the pace of that improvement slows well short of a full recovery, even as data generally continues to improve simultaneously. 

Several Macro Indicators Show Ongoing Progress: Retail sales show consumers continuing to boost the economy last month as spending increased by 2.5%--above 2019 levels for the 3rd consecutive month. Small business optimism as measured by both Wells Fargo and the National Federation for Independent Business (NFIB), tick back above 100 as well, suggesting that more respondents were optimistic than pessimistic. Finally, the nation’s industrial sector also grew by 0.4% in August as production has slowly begun again. 

Strong Buyer Demand Remains a Persistent Theme: Interest rates for 30-year, fixed-rate mortgages dipped to another all-time low last week, according to the latest survey from Freddie Mac. This reduced borrowing costs coupled with an increased emphasis on the home by consumers as a result of the crisis has pushed the ShowingTime.com index of private showing appointments to a level 150% higher than it was during the second week of September 2019.

Unemployment Claims Dip Below 1 Million: For the second consecutive week, there were 884,000 initial claims for unemployment insurance were filed. This marks the 4th consecutive weekly decline after some modest increases in July and August. Significantly, this is only the 3rd time since the initial shelter in place rules were issued in California back in March when fewer than 1 million people filed for unemployment benefits.

Closed Sales Experience Largest Weekly Drop Since March: The average number daily of homes fell to 684 last week. That is down more than 21% from the previous week and represents the largest 1-week decline since the crisis was ramping up back in March. This is likely due to a severe lack of inventory as new listings continue their losing streak with another double-digit decline last week, which led pending sales to their 7th weekly decline in the past 9 weeks. Buyers want to buy, but supply is preventing many from being able to take advantage of low interest rates.

REALTORS® Report a Step Back in Business Activity Last Week: REALTOR® Members surveyed over the weekend reported a reported that the market softened last week. Respondents who had a listing appointment last week fell 16.5%, those reporting a new listing fell 21.9%, new escrows fell 0.6%, and the number of REALTORS® closing a transaction last week fell 6.5%. REALTORS® are still reporting stronger results than they saw back in May, but the improvements have been more muted over the past 5 weeks.

Pace of Growth in Mortgage Apps Slows: Although still running ahead of 2019, the increase in new purchase mortgage applications was up just 6% last week. That is a marked deceleration from the previous 7 weeks where mortgage applications were at least 20% higher than they were during the previous year. Buyer demand remains unseasonably strong, but this provides the first evidence that the extended homebuying season could be gradually losing momentum.

There is much to be optimistic about as we continue to make headway in chipping away at the effects of COVID-19. However, hustle, grit, and stick-to-it-ness remain critical as the recovery starts to lose momentum and challenges in the marketplace require even more of REALTORS® for our clients.