Mortgage applications for home purchase have risen in each of the past seven weeks, and in May were up 2.7% y/y. With the unemployment rate at a record high, that strength in demand is surprising. Record low mortgage rates, plenty of spare time, the need for more space, increased savings and the hope of finding a cut-price home help explain the recovery. But, with credit conditions tightening and inventory at record lows, we doubt existing home sales will see a similar surge over the next couple of months.
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