mortgages

Refinance ‍Applications Plummet as Mortgage Rates ‌Climb

Mortgage refinance applications experienced a⁤ significant decline last week, falling 21%, according too data from the ‌Mortgage Bankers Association (MBA).​ This drop comes after a recent period of increased refinance activity​ fueled by lower rates. overall mortgage ‍application volume ⁢decreased 12.7% compared to the previous week.

The increase in​ refinance application decline coincided with a rise in mortgage rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.46% from 6.34%,with points rising to⁤ 0.61 from 0.57. This represents a 32 basis ​point increase compared to the same week last year.

Consequently, the refinance share of total ​mortgage activity decreased from 60% to 55%.The average loan size⁤ for⁤ refinances also fell, dropping from​ $461,300 two ⁣weeks ago to $380,100, indicating⁢ that higher rates are diminishing the incentive for borrowers with larger loans to ⁢refinance. Both conventional and VA refinance⁣ applications⁢ saw⁢ substantial declines, falling 22% and⁤ 27% respectively.

While refinance​ activity cooled, purchase applications⁤ also saw​ a​ slight ⁤decrease, down 1% for⁣ the week, following ⁣three ⁢consecutive weeks of​ gains. Purchase applications remain 16% higher than the‍ same week one year ago.

According to Joel Kan,vice president and deputy chief economist at the MBA,the rate increase ‍was driven by stronger-than-expected economic ‍data pushing Treasury yields higher. He noted that refinance ​opportunities this‌ year are ⁣likely to be⁤ “short-lived.”

The housing market continues to experience inventory challenges. August saw the first decline in housing inventory this year, with​ some sellers choosing to delist properties or postpone sales,⁣ awaiting more favorable market conditions.

Looking ahead, the release ⁤of the⁤ monthly employment report, which was ⁣expected to influence‌ mortgage rate movement this week, is now uncertain due to the ongoing government shutdown. Mortgage rates have remained stable at ⁣the​ start of the week.

Existing Home Sales Remain Flat in August ⁢as Inventory Tightens

Existing home sales were largely‌ unchanged in August,‌ registering a⁢ seasonally adjusted annual rate of 4 ‍million units, according too ⁢the National Association of Realtors (NAR). This represents a slight 0.2% decrease from July but a 1.8%⁢ increase compared to‌ August of the previous year. The Midwest⁢ region experienced the strongest sales, while the Northeast lagged behind.

These figures reflect closings from deals finalized in June ⁢and July, a period when mortgage rates were approximately 50 basis points higher than current levels. The recent decline in mortgage rates at the beginning of September will not be reflected in this data.

A divergence is apparent within​ the market, with higher-priced⁢ homes outperforming those at the lower end. Sales of homes priced above $1​ million rose 8% year-over-year, leading all segments. ​Conversely, sales of homes under $100,000 declined ‌by ‍over 10%‌ compared to a year ago.

“Record-high housing wealth⁣ and a record-high stock market will help ⁣current homeowners trade up and benefit the‍ upper end of the​ market. However, sales of affordable homes are constrained ⁢by the lack of inventory,” explained Lawrence⁣ Yun, NAR’s chief economist.

The Midwest proved to be the strongest performing region in August, attributed to its ⁣more affordable market conditions. ⁤Median home prices in the Midwest were 22% below the⁢ national median price.

Supply, a key⁤ factor in the​ current market, experienced a shift.After increasing⁢ earlier in the year, inventory fell 1.3% in August from July,although it remains 11.7% higher than in August of⁢ the previous ​year. This marked the first ⁢monthly decline in supply since⁤ the beginning of the year.Sellers, responding to​ softening prices and elevated mortgage rates, are either‍ withdrawing ⁣listings or delaying them. The available supply represents 4.6 months, considered a lean market.

the limited supply is contributing to continued price growth.⁣ The median existing-home price in August was $422,600, ‌a 2% increase from a year ago, marking the 26th consecutive month of annual⁤ price gains.

Homes are taking ⁣longer to sell,averaging 31 days on ​the market in August,up from‍ 26‍ days in August 2024. first-time homebuyers represent a historically low 28%​ of sales, while all-cash buyers account for 28% of transactions, up from 26% a year ago.