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The Mortgage Bankers Association (MBA) said on
Wednesday its seasonally adjusted market index fell 4.0% in the
week ended July 16 from a week earlier. That reflected a 2.8%
decrease in applications to refinance existing loans, while
purchase applications declined 6.4% to their lowest level since
May 2020.
The average contract interest rate for traditional 30-year
mortgages increased to 3.11% from 3.09% the prior week. Last
week, the average contract interest rate dropped to its lowest
level since February.
"Limited inventory and higher prices are keeping some
prospective homebuyers out of the market," Joel Kan, MBA's
associate vice president of economic and industry forecasting,
said in a statement.
"Refinance activity fell over the week, but because rates have
stayed relatively low, the pace of applications was close to its
highest level since early May 2021," the statement added.
This week's data comes just one day after the Commerce
Department reported housing starts accelerated in June, while
building permits dropped to an eight-month low.
Also, U.S. homebuilder confidence fell to an 11-month low in
July, driven by shortages in both supply and labor.
"While construction companies work to balance lumber costs
returning to earth with increases in labor and development
costs, the market shortage of about 4.0 million homes remains an
obstacle yet to overcome," said George Ratiu, senior economist
at Realtor.com.
"Millions of buyers are eager and able to buy, if only they can
find the right home at an affordable price."
(Reporting by Evan Sully; Editing by Peter Cooney)
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