As the spring housing market concludes and the summer season begins, the challenges in the housing market show no signs of abating. Despite high home prices continuing to climb, mortgage rates remaining elevated, and limited increase in home listings, the state of the housing market remains lackluster. This is evidenced by the stagnant weekly mortgage demand, which has remained unchanged for two consecutive weeks.
The latest data from the Mortgage Bankers Association reveals that total mortgage application volume saw negligible growth of just 0.8% in the previous week. Mortgage rates also saw minimal movement, with the average contract interest rate for 30-year fixed-rate mortgages experiencing a slight decrease to 6.93%. However, this is the lowest rate in over three months, indicating a potential silver lining amidst the challenging market conditions.
While applications to refinance a home loan remained unchanged week over week, they were significantly higher by 26% compared to the same period last year. On the other hand, applications for mortgage to purchase a home experienced a modest 1% increase for the week but were 13% lower than the previous year. The housing supply has expanded by 18% from the previous year, yet the market remains highly competitive and inventory scarce.
Mortgage rates have stayed relatively steady in the most recent updates, and they are expected to remain unchanged until the release of crucial reports on consumer spending and personal consumption expenditures prices later in the week. The impact of these reports on inflation and bond yields will likely influence the direction of mortgage rates in the near future.
The housing market continues to face multiple challenges as we enter the summer months. With high home prices, elevated mortgage rates, and limited inventory, prospective buyers and refinancers are navigating a complex and competitive environment. While some indicators suggest a slight improvement in certain segments of the market, the overall conditions remain subdued. It remains to be seen how the market will evolve in the coming weeks and months, as external factors such as inflation and consumer spending play a significant role in shaping the trajectory of the housing market.