Credit scores have never been higher, positioning more Americans to qualify for some of the best mortgage rates ever. Yet, nearly 10.1 million Americans remain unemployed and have skipped mortgage or debt payments. How can this be?
“It’s been bizarre with this recession to see credit scores go up,” Matt Schulz, chief credit analyst at LendingTree, told MarketWatch.
At the beginning of 2020, FICO credit scores averaged 703. By October, the average FICO credit score rose to 711, Experian FICO credit score data shows. VantageScore credit scores rose an average of four points above 2019 scores to 690 in 2020. (In general, a FICO score above 660 and a VantageScore above 670 is considered good, MarketWatch notes.)
Government stimulus programs and relief measures during the pandemic may be helping. Studies have shown that many consumers used the stimulus checks to pay down their debts, which could have helped to boost their credit scores. Also, forbearance and deferment programs put in place during the pandemic for mortgages, student loans, and car payments may have freed up some money to allow borrowers to pay down some of their other bills. Under COVID-19 relief measures, lenders are required to report accounts as current or “paid as agreed” for borrowers who are delaying their payments due to financial struggles from the coronavirus.
“That means that consumers’ credit scores won’t be lowered if they didn’t have any preexisting delinquencies,” MarketWatch reports. “That would make it easier for these consumers to secure a loan or mortgage in the short- and medium-term.”
But credit scores won’t remain frozen. CARES Act provisions will remain in effect for 120 days after the national coronavirus emergency is terminated by the president or Congress. As borrowers are required to start repaying any frozen debts, they may start to see their credit scores decrease if they’re unable to make those payments.
“‘It’s Been Bizarre With This Recession to See Credit Scores Go Up’,” MarketWatch (Feb. 16, 2021)
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Home sales could easily be 20% higher if more homes were for sale, says Lawrence Yun, chief economist of the National Association of REALTORS®. Existing-home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—rose 0.6% in January compared to December 2020 and are up nearly 24% over a year ago, the National Association of REALTORS® reported Friday. All four major regions of the U.S. recorded double-digit annual gains for home sales in January.
“Home sales continued to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” Yun says. Seventy-one percent of homes sold in January were on the market for less than a month, according to NAR’s report.
While most of the economy has felt the toll of the lingering COVID-19 pandemic, the housing sector has remained a bright spot, Yun adds. Sales remain high and home prices have continued to rise, adding equity to home sellers.
“Home sales are continuing to play a part in propping up the economy,” Yun says. “With additional stimulus likely to pass and several vaccines now available, the housing outlook looks solid for this year.” Yun predicts employment to increase, which could spur even more homebuying over the coming months. He predicts existing-home sales to reach at least 6.5 million in 2021.
Here’s a closer look at key indicators from NAR’s existing-home sales report, reflecting January sales data:
Home prices: The median existing-home price for all housing types in January was $303,900—a 14% jump over a year ago.
Inventory: Total housing inventory at the end of January was 1.04 million units, down nearly 26% from a year ago. Unsold inventory sits at a 1.9-month supply at the current sales pace.
Days on the market: Properties typically remained on the market for 21 days in January, down from 43 days a year prior.
First-time buyers: First-time buyers comprised 33% of sales in January, up slightly from 32% a year earlier.
Cash sales: All-cash sales accounted for 19% of transactions in January, down from 21% a year ago. Individual investors or second-home buyers tend to make up the biggest bulk of cash sales. They accounted for 15% of sales in January, down from 17% in January 2020.
Here’s how existing-home sales fared in January across the country, according to NAR’s report:
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