Nadia Evangelou is a senior economist and director of forecasting for the National Association of Realtors. She says this was one of the most anticipated reports in the housing industry, since it reflects the impact of COVID-19 on housing demand.

“However, there are some serious questions about the accuracy of this survey. It is likely the results in the second quarter are distorted by the pandemic,” she cautions.

“Specifically, in-person interviews were suspended for the second quarter and replaced with telephone interview attempts when contact information was available.”

“The current report might show an increased homeownership trend. But we should exercise caution when using the absolute numbers of homeownership rates.” –Nadia Evangelou, Senior Economist, NAR

Consequently, the response rate was lower in this report than the average response rates for the second quarter of 2019.

“The current report might show an increased homeownership trend. But we should exercise caution when using the absolute numbers of homeownership rates,” says Evangelou.

Tony Julianelle, CEO of Atlas Real Estate, agrees.

“This is fascinating data. But it seems too much of a move in the underlying numbers that I’m not sure correlates to actual sales data across the country,” explains Julianelle.

Support for record homeownership numbers in 2020

Suzanne Hollander, a real estate professor at Florida International University, thinks these numbers could be legit.

“The Realtors I regularly deal with as a broker, professor, and attorney tell me that single-family homes are flying off the charts,” says Hollander.

Dan Putney, managing director of mortgage solutions at Finastra, echoes those thoughts.

“We understand there has been a move from cities to rural America allowing a safer coronavirus environment for families,” says Putney.

“And while spring is typically the busiest buying time, that was postponed. That led to the biggest June ever in terms of purchase volumes.”

Based on loan application data coming through Finastra’s loan origination portal, “we’ve seen a 34 percent spike in applications for June, year-over-year,” he adds.

Fewer foreclosures may lead to higher homeownership numbers

Hollander also notes that homeownership numbers may be a bit skewed due to an overlooked factor.

“Foreclosure moratoriums have been in effect for several months. This impacts the number of current homeowners,” she says.

When foreclosure bans end, there’s a chance homeownership numbers could tip back downward, or at least level out instead of continuing to rise.

Matthew Dailly, managing director of Tiger Financial Ltd., points to other factors for the reported spike in homeownership.

“People are spending less money on entertainment, eating out and other discretionary purchases,” he says.

“For those who are already saving money for homes, this behavior may have gotten them to their goal a lot quicker than expected, leaving the market with an abundance of potential buyers.”

“We’re seeing more millennials benefiting from lower mortgage rates and buying their first homes to raise their families.” –Nadia Evangelou, Senior Economist, NAR

Gen Y may be a big reason for the spike, too.

“Homeownership gains continue to be concentrated among millennial households. They represent the largest cohort of home buyers,” Evangelou says.

“We’re seeing more millennials benefiting from lower mortgage rates and buying their first homes to raise their families.”

Many predict that homeownership will continue its upward trend in the near-term. That’s especially true if mortgage rates stay low, as expected, and lack of inventory doesn’t kill the trend.

“I expect the [homeownership] rate to continue to increase since mortgage rates will continue to hover around all-time lows. Specifically, the 30-year mortgage rate is expected to average 3.1 percent for 2020 and 2021,” says Evangelou.

Julianelle also foresees more people buying and owning homes in the months ahead.

Homeownership could continue to rise as rates stay low. Or, a coming recession could stem the tide of home buyers.

“Post-COVID-19 there will be continued demand for homeownership as families work through the lingering impacts of work- and school-from-home scenarios,” says Julianelle.

Others are not as optimistic that the desire to purchase and own will continue at this pace.

“I wouldn’t expect to see continued growth as we head toward a potential recession in a rumored second wave of the pandemic,” says Dailly.

“I believe people will start to save more money as protection for whatever the next six months might hold in store for them. And we’re likely to see a flip from big picture thinking to immediate effect considerations.”