Homebuyers grapple with high prices and limited choices
Overall mortgage applications declined 7.2% week over week, driven by the continued shortage in housing supply and the persistently high prices of homes, the Mortgage Bankers Association said today.
In the MBA’s weekly mortgage applications survey, home loan application volume saw a seasonally adjusted decline of 7.2%. However, on an unadjusted basis, applications were up 8% compared to the previous week.
“Mortgage rates changed little last week, with the 30-year fixed rate at 6.78%, close to where it has been for the past month, but lower than the recent peak of 7.9% in October 2023,” said MBA deputy chief economist Joel Kan.
However, Kan explained that the stability in rates hasn’t been enough to overcome the challenges posed by limited housing supply and high home prices, which continue to put a damper on the activity of home purchases.
“Applications decreased compared to a holiday-adjusted week, driven by a decline in purchase applications that offset a slight increase in refinance activity,” he said.
Amid these fluctuations, MBA’s refinance index climbed 2% from the previous week and, interestingly, 3% higher than last year. The seasonally adjusted purchase index fell 11% week over week. Unadjusted purchase applications saw a 6% increase but remained 20% lower than the same week a year ago.
“Low existing housing supply is limiting options for prospective buyers and is keeping home-price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity,” Kan added. “The average loan size for purchase applications has picked up in recent weeks to $444,100, the largest average loan size since May 2022.”
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The share of refinance activities in the overall mortgage market increased to 34.2% from 32.7% in the preceding week. Additionally, the share of adjustable-rate mortgages (ARMs) in total applications edged up to 6.6%.
Government-backed loan applications showed slight changes, with the share of FHA loans dipping to 13.8% and VA loans to 13.3%. USDA loan applications, however, remained unchanged at 0.4%.
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