Mortgage demand shot up this week to a level not seen since April, owing to an increase in inventory that has lured prospective homebuyers into the market.

While the interest in taking out a mortgage usually dims after the summer, data from the Mortgage Bankers Association (MBA) suggest the usual market trends are not applying in the COVID-19 pandemic.

Mortgage applications to purchase a home are up 7% from last week, seasonally adjusted and accounting for the Labor Day holiday. The number remains 11% below the same week last year, but that represents the smallest annual decline of the summer.

The supply for housing has been struggling to keep pace with demand. According to recent data from Realtor.com, the U.S. is short 5.24 million single-family homes because of rising costs associated with constructing homes.

This shortage of properties was exasperated by the pandemic, but problems like rising production costs and a labor shortage predated it. Some developers themselves admit to scaling back housing construction because they do not trust that they can meet demand until material prices go down.

However, buyers seem to be reacting to the steady growth of supply after restraining themselves through COVID-19. A Realtor.com report explained that it is not a sign that the market has recovered to pre-pandemic levels, but the gap from where it is and where it once was has narrowed "significantly," Joel Kan, an MBA economist, remarked to CNBC.

Kan said that the combination of increased interest from conventional and government customers is maintaining enough upward pressure to keep prices high in a “very competitive market.”

The average contract interest rate on a 30-year, fixed-rate mortgage remained the same at 3.03% for those with a conforming loan balance of $548,250 or less.

RELATED STORIES
Coronavirus