The summer housing market is not shaping up to be any better than the weak spring market that preceded it. Despite high home prices and rising mortgage rates, consumers are showing little interest in increasing home listings. As a result, weekly mortgage demand has remained stagnant for the second consecutive week. The Mortgage Bankers Association reported that total mortgage application volume only increased by 0.8% from the previous week, reflecting the lackluster state of the market.
In addition to the stagnant demand, mortgage rates have also shown little movement. The average contract interest rate for 30-year fixed-rate mortgages decreased marginally to 6.93%, which is the lowest rate seen in over three months. However, this slight decrease was not enough to entice refinance borrowers back, as most still hold mortgages with lower rates. Although applications to refinance were unchanged week-over-week, they were 26% higher than the same week last year. On the other hand, applications for home purchase loans increased by only 1% for the week but were 13% lower than a year ago.
Government purchase loans, primarily FHA and VA loans, saw gains of more than 2% over the previous week as homebuyers in those segments took advantage of the recent rate relief. This increase in government-backed mortgage applications helped offset some of the stagnation in the overall market. However, the total housing supply is still 18% higher than it was a year ago, indicating that it remains a challenging market for buyers.
Future Outlook
Mortgage rates have remained relatively stable to start the week, with expectations that they will continue to stay that way until important reports on consumer spending and inflation are released on Friday. The impact of these reports on bond yields and mortgage rates remains to be seen, but any hint of inflation could potentially shake up the market. Overall, the summer housing market continues to face challenges, with high prices, stagnant demand, and unimpressive consumer interest creating a difficult environment for both buyers and sellers.