With mortgage rates falling during the COVID-19 crisis, many households were able to refinance to lower payments. Because a mortgage payment is almost always the most prominent payment households make each month, lower payments have allowed homeowners who bought homes to have better cash flow over the last few years. This means mortgage holders who have refinanced their homes to lower payments while their wages have also grown look great on paper.
In general, homeowner households were financially solid going into the crisis. When COVID-19 happened, some sellers were able to sit back and watch the market. We didn’t see any mass hysteria to sell. It was just a matter of weeks before the buyers returned and sellers sold their homes, leading home sales to get to pre-cycle highs in 2020 and 2021.
And then home prices took off, and total inventory levels dropped toward all-time lows. The housing market prevailed during COVID-19, and this was a positive outcome not only for the U.S. housing market but for the American economy.
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