New York (CNN Business) -
The stock market remains volatile and the job market remains in its worst shape since before Covid-19 plunged the United States into recession.
But there is still an undeniable bright spot for the American economy: the housing market.
Mortgage applications are on the rise, thanks to historically low rates.
The Federal Reserve plans to keep interest rates close to zero for the foreseeable future, which will make financing even more affordable.
"Housing will probably come out as one of the winners from this crisis," said Esty Dwek, director of Global Market Strategy for Natixis Investment Managers.
Interest rates should stay low for longer.
So I don't expect housing to be another problem for the economy, "added Dwek.
The strength in the housing market has also helped drive CNN Business' return to normal index.
CNN Business partnered with Moody's Analytics to create the index, which looks at a variety of measures to judge how the economy is doing.
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Mortgage interest rates
On the housing front, the index includes daily new home postings from Zillow and weekly loan applications from the Mortgage Bankers Association.
Low rates are one of the main reasons home sales and prices continue to rise.
Additionally, the coronavirus outbreak is causing many people in large cities to leave their apartments and buy larger homes in less densely populated suburbs.
"Rising prices are just one more reason for people to leave expensive urban neighborhoods behind," said Redfin chief economist Daryl Fairweather in a report last week.
"The sudden rise in remote work has allowed homebuyers priced outside of a neighborhood to broaden their search to more affordable areas," added Fairweather.
Low number of homes put up for sale due to coronavirus, according to Zillow data
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The exodus to the suburbs continues
Redfin said in his report that median home sales prices were up 13% from the previous year to nearly $ 320,000.
That is the highest price on record.
What's more, recent increases in pending home sales and new home listings were the highest since 2015.
The housing market on the West Coast is particularly on the rise.
According to data from real estate and housing market analysis firm Meyers Research, new home prices rose solidly in July in Phoenix, Denver and Las Vegas, as well as Sacramento and Riverside, California.
Meyers Research said in a report that "low mortgage rates and the desire for more space have pushed many residents to become homeowners."
Also, that residents of the more expensive areas of Los Angeles and San Francisco are the ones moving to other cities.
The 'cooling' of the housing market
However, at some point prices could go too high.
Builders may want the hot real estate market to cool down a bit.
«Land is a valuable and limited asset.
Builders must be careful not to sell all of their lots too quickly, so many will intentionally slow sales, "Ali Wolf, chief economist at Meyers Research, said in a report.
"Today's low mortgage rates allow builders to raise prices without crushing demand," Wolf added.
Redfin's Fairweather is also concerned that home prices may become too high.
That would be especially problematic for tenants who don't have the advantage of profiting from an existing home.
"So high house price growth is making the housing market especially tough for first-time home buyers right now," Fairweather said.
"Price growth may slow in 2021, but even if it does, high prices will continue to make affordability a concern for buyers."
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