As we transition from a weaker-than-expected spring housing market, the summer season does not appear to hold much promise. The persistently high home prices are on the rise, while mortgage rates remain stagnant at recent highs. Moreover, consumers seem unenthused by the minimal increase in home listings. This lackluster scenario is vividly reflected in the weekly mortgage demand trends, which have remained stagnant for the past two weeks.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume showed no significant change last week. It recorded a mere 0.8% increase from the previous week. The average contract interest rate for 30-year fixed-rate mortgages did not fluctuate much either, decreasing marginally to 6.93% from 6.94%. However, it is worth noting that this marks the lowest rate seen in over three months.
Applications for refinancing a home loan showed no change from the previous week but were notably 26% higher compared to the same period last year. Despite the lower rates, many homeowners are still hesitant to refinance, as they currently hold mortgages with significantly lower rates. This sentiment is further echoed by Joel Kan, an economist at the Mortgage Bankers Association.
On the other hand, mortgage applications for home purchases saw a slight uptick of 1% for the week under review. However, they remained 13% lower compared to the corresponding period last year. Despite total housing supply showing an 18% increase from the previous year, the market remains highly competitive with limited inventory available.
As mortgage rates have remained stagnant, it is anticipated that they will continue in this trajectory until key reports on consumer spending and personal consumption expenditure prices are released later in the week. These reports are likely to shed light on the current state of inflation, which can significantly influence bond yields and subsequently impact mortgage rates.
The current state of the housing market reflects a period of stagnation and sluggish growth. With home prices climbing steadily, mortgage rates at a standstill, and limited inventory, the market continues to present challenges for both potential homebuyers and refinancers. While short-term market trends may remain somewhat predictable, the long-term outlook remains uncertain, subject to various economic factors and consumer behaviors.