Housing Insights: COVID-19 Led First-Time Homebuyers to Move Away from Highly Dense City Centers
Originally published on March 30, 2021, by Rebecca Meeker and Nuno Mota for Fannie Mae.
As the COVID-19 pandemic swept across the country in 2020, it touched nearly every aspect of the U.S. economy. In the housing market, new listings, home sales, and residential construction all plummeted in the spring of 2020. In the following months, however, the housing market proved resilient, with home sales and new construction reaching decade highs amid historically low mortgage rates.
During this time, there was widespread anecdotal evidence that the pandemic had shifted consumer demand from core city centers to lower-density markets, like the suburbs.1 Fannie Mae's Q3 2020 National Housing Survey® (NHS) showed that on a national level, most households reported they were living where they wanted, with no noticeable uptick in people responding that they were planning to move soon.2 However, when looking at the population of people applying for a mortgage, there was a clear shift in behavior. While low mortgage rates helped drive demand for housing in 2020, our analysis addresses the relative shifts of composition within this increase in demand. We used proprietary Desktop Underwriter® (DU®) data, showing purchase mortgage applications for primary residences, to examine how the COVID-19 pandemic impacted housing demand, including the make-up of potential homebuyers, and assessed possible preference shifts evident in some of the largest markets in the country.