Mortgage applications fall with home sales

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Mortgage applications fell for the fourth consecutive week as sales of existing homes continued to decline and interest rates hit new records.

The National Association of Realtors (NAR) reported Thursday that existing homes sold at a seasonally adjusted annual rate of 4.71 million in September, down 24% from a year earlier and 1. 5% compared to August. This is the eighth consecutive month of declines.

NAR Chief Economist Lawrence Yun said the housing sector continued to experience an adjustment due to the continued rise in interest rates, which topped 6% for 30-year fixed mortgages in September. and are now approaching 7%.

“Expensive parts of the country are particularly feeling the pinch and are seeing bigger declines in sales,” Yun said.

Lawrence Yun Lawrence Yun

Mortgage applications in the week ending October 14 were 4.5% lower than the previous week after seasonal adjustments – the fourth consecutive week of declines and a continuation of a generally downward trend in course of the last four months.

“Mortgage applications fell again last week as mortgage rates hit 20-year highs, and continued economic uncertainty and affordability issues continue to impact borrower demand” , MBA President and CEO Bob Broeksmit said Thursday.

Bob Broeksmit Bob Broeksmit

The refinancing index fell 7% from the previous week and 86% from the previous year. The seasonally adjusted shopping index fell 3% from the previous week and 38% from a year ago.

MBA deputy chief economist Joel Kan said applications fell to their lowest level since 1997, the average contract interest rate for 30-year fixed-rate mortgages with loan balances compliant having reached 6.94% last week, the highest level since 2002.

The effective rate on a 30-year fixed-rate mortgage with a value of 80% or less was 7.21% last week, down from 6.52% four weeks ago and 3.50% the previous week. a year ago.

“The speed and level at which rates have climbed this year has significantly reduced refinancing activity and exacerbated existing affordability issues in the purchase market,” Kan said. “Residential housing activity, ranging from housing starts to home sales, trended downward coinciding with rising rates.”

Joel Can Joel Can

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rose to 6.94% from 6.81% last week.

Broeksmit said the share of applications for variable-rate mortgages (ARMs) was at its highest level in 14 years, with potential buyers turning to ARMs to reduce their monthly mortgage payment. “Even at 13%, however, the share of ARM apps is still about a third of the peak seen in the early 2000s,” he said.

NAR reported that house prices remain high. More than half of homes sold for at least $384,800 last month, an 8.4% jump from September 2021, as median prices climbed in all regions. Prices were lower than in August. Although this was the third monthly decline in price since hitting a high of $413,800 in June, it followed the usual seasonal pattern of lower prices after peaking in early summer.

Unsold inventory remained at a 3.2 month supply at the current selling rate – unchanged from August and up from 2.4 months in September 2021.

“Despite weaker sales, several offers are still in place, with more than a quarter of homes selling above list price due to limited inventory,” Yun said. “The current lack of supply underscores the vast contrast to the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”