Zillow Market Pulse: October 28, 2020

October 28, 2020

Applications for home purchase loans improved slightly on the week, halting a streak of four straight weekly declines. Safety concerns related to the pandemic may be contributing to increased rates of people quitting their jobs. And durable goods orders rose strongly in September, another good sign for the manufacturing sector.

For-purchase mortgage applications stop their four-week slide

• A seasonally adjusted reading of applications for home purchase loans increased by 0.2% in the week ending October 23 from the week prior, according to the Mortgage Bankers Association
• The index had fallen slightly for each of the last four weeks

The pandemic is causing some people to consider leaving their job

• A new poll conducted by the Associated Press-NORC Center for Public Affairs Research suggests that a quarter of current U.S. workers have considered quitting their jobs due to fears pertaining to the pandemic
• About 20% of workers have had to take leave as a result

Factory orders increased strongly in September, but rising cases threatens this momentum

• Orders for durable goods rose 1.9% in September from August
• But durable goods orders are still well below pre-pandemic levels and rising case counts threaten this growing optimism

So what? 

Applications for home purchase loans had fallen on a weekly basis for four consecutive weeks before today's announced modest weekly improvement. Today's release wasn't a blockbuster – the weekly improvement was minuscule – but it reinforced that homebuyer demand remains robust heading into the fall. Despite the four weekly declines, application activity pertaining to home purchase mortgage loans remains near its highest level in the last 12 years and 24% above last year's levels. This enduring homebuyer activity comes as inventory levels continue to plummet and price continue to spike. In the week ending October 17, there were 37% fewer homes on the market than there were in the same week last year, according to Zillow Economic Research, and the average purchase loan size that was applied for last week was $372,600 – a new all-time high.

Recent reports on labor turnover – the number of people entering or exiting employment or the labor force and the reasons why they're doing so – have highlighted what's usually an encouraging trend: more people are quitting their jobs. Quits are generally viewed as evidence of a strong or strengthening labor market, suggesting that people are sufficiently confident in their ability to find new employment that they decide to pass on their existing job, though there's reason for skepticism in the current environment. The number of people voluntarily leaving their roles fell slightly in August from July, but the level has increased by about 50% since a low in April. A new report suggests that the recent increases in quits may not be occurring for healthy reasons after all. A poll conducted by the Association Press-NORC Center for Public Affairs Research suggests that a quarter of current U.S. workers have considered quitting their jobs due to worries related to the pandemic, and about 20% of U.S. workers have had to take leave as a result. Lower income households – those making $30,000 or less annually – were disproportionately more likely to express these concerns. The report also showed a divide across genders. Half of women feel the pandemic is a major source of stress, compared to just 36% of men. All told, the report suggests that voluntary job losses may have been due to unhealthy factors such as safety concerns and childcare responsibilities, rather than people finding a better job. 

In another sign that the economy is finding its footing, seasonally adjusted orders for durable goods – products that are designed to last at least three years, often in factories – increased 1.9% in September from August. New orders for nondefense capital goods excluding aircrafts – a widely cited proxy for business investment – grew 1% on the month. Both series were above consensus expectations. The report was the latest piece of encouraging news for the manufacturing sector in recent weeks – the IHS Markit Purchasing Managers Index, released last week, showed that activity in the manufacturing sector was growing at its fastest pace since early 2019. But recent strong upticks in coronavirus cases threaten this mounting optimism. As global case counts rise across the globe, demand for goods may wane and supply chain issues may worsen from their already delicate state.

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