The housing market continues to face challenges as the summer season progresses. Despite hopes for a rebound following a lackluster spring, high home prices, and steady mortgage rates are preventing any significant improvement in market conditions. This is evident in the stagnant weekly mortgage demand, which has remained flat for the second consecutive week. The Mortgage Bankers Association reported that total mortgage application volume increased by a mere 0.8% from the previous week, reflecting the lack of momentum in the market.
While there was a slight decrease in the average contract interest rate for 30-year fixed-rate mortgages, it was not enough to entice borrowers to refinance their home loans. Many homeowners are still holding onto mortgages with much lower rates, despite the recent rate decrease. As a result, applications to refinance remained unchanged from the previous week, although they were 26% higher compared to the same week last year.
On the other hand, there was a 1% increase in applications for mortgages to purchase homes. However, this figure is still 13% lower than the same period last year, highlighting the ongoing challenges in the housing market. Government purchase loans, primarily FHA and VA, saw gains of more than 2% from the previous week as buyers in these segments took advantage of the recent rate relief.
Supply Constraints and Economic Indicators
Despite a year-over-year increase of 18% in total housing supply, the market remains constrained by low inventory levels. As mortgage rates remained relatively stable at the beginning of the week, all eyes are on upcoming reports on consumer spending and personal consumption expenditures prices. These reports, set to be released on Friday, are expected to shed light on the current state of inflation, which could impact bond yields and mortgage rates.
The housing market continues to face significant challenges with high prices, stagnant mortgage demand, and inventory constraints. While there have been some slight improvements in purchase applications, the overall market conditions remain subdued. As the summer progresses, it remains to be seen whether the market can overcome these obstacles and experience a much-needed resurgence.