Despite Rise in Inventory, Mortgage Application Volume Declines

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The latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) has found mortgage applications sliding 1.9% from one week earlier.

The MBA’s Market Composite Index, a measure of mortgage loan application volume, decreased 1.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3% compared with the previous week. The Refinance Index decreased 3% from the previous week and was 4% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.2% from one week earlier. The unadjusted Purchase Index decreased 3% compared with the previous week, 18% lower than the same week one year ago.

The refinance share of mortgage activity remained the same as the previous week at 66.8%, while the share of adjustable-rate mortgage (ARM) activity decreased to 2.5 percent of total applications.

“Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3% for several weeks. Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.”

According to the’s Monthly Housing Report for August 2021, inventory and new listings improved during the month, as 432,000 newly-listed homes hit the market, a 4.3% rise in inventory year-over-year. U.S. housing inventory declined 25.8% year-over-year in August to close out Q3, an improvement over July’s decline of 33.5%.

“Low mortgage rates have motivated homebuyers to endure this year’s challenging market and now some buyers are starting to see their persistence pay off,” said Chief Economist Danielle Hale. “This month, new sellers added more affordable entry-level homes to the market compared to last year, while others began adjusting listing prices to better compete with an uptick in inventory.”

By loan type, the FHA share of total applications decreased to 10.9% from 11.2% the week prior. The VA share of total applications increased to 10.4% from 9.7% the week prior, while the USDA share of total applications remained unchanged from 0.5% the week prior.

CoreLogic’s latest Home Price Index (HPI) and HPI Forecast found that despite mortgage rates at near record lows, the ongoing challenges of persistent demand, a rebounding economy, and constricted supply continue to put upward pressure on home prices, forcing home prices to rise 18% on average across the nation.

“Home price appreciation continues to escalate as millennials entering their prime homebuying years, renters looking to escape skyrocketing rents and deep pocketed investors drive demand,” said Frank Martell, President and CEO of CoreLogic.

However, that upward pressure on pricing seems to be easing, as the Biden Administration’s early-September announcement related to increasing affordable housing in America may impact the market in the months to come.

“While properties across the U.S. continue to sell at record high prices, our latest data reveals that the breakneck pace of housing price growth has likely seen its peak and we expect it to decline in the coming months,” said Jeremy Sicklick, Co-Founder and CEO of HouseCanary.

Optimism in inventory was seen by Sicklick in HouseCanary’s newest report, which found that since August 2020, there have been 3,181,376 net new listings placed on the market, an 11.2% increase versus the same period in 2019. When broken down by home price, 18.6% of new listings are homes in the $0-$200,000 range, 41.5% are in the $200,000-$400,000 range, 20.3% are in the $400,000-$600,000 range, 13% are in the $600,000 to $1 million range, and 6.6% are homes were priced in excess of $1 million.

Another sign of life in the economy came last week from the Bureau of Labor Statistics (BLS) which found that in August 2021, total non-farm payroll employment rose by 235,000 in August, and the unemployment rate dropped by 0.2 percentage point to 5.2%. So far this year, monthly job growth has averaged 586,000, with notable job gains found in August in professional and business services, transportation and warehousing, private education, manufacturing, and other services.


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