A key housing finance index showed that mortgage applications last week fell 8.5 percent on a seasonally-adjusted basis from the previous week, a sign that bodes badly for the struggling sector that is attempting a sustained recovery.
Meanwhile, the Commerce Department said today sales of newly built single-family homes dropped 11.2 percent in January to a 309,000-unit annual rate, the lowest since records started in 1963. The rate was at 348,000 units in December. It was the third consecutive monthly decrease in new home sales.
The weekly applications survey by the Mortgage Bankers Association was influenced by winter storms, but it was just one factor. And demand for home purchase loans is at the lowest level in 13 years.
The industry group’s Market Composite Index measures mortgage purchase and refinance applications. The purchase index fell 7.3 percent from one week earlier, which puts the index at its lowest level since May 1997. The refinance index decreased 8.9 percent. Both figures are seasonally adjusted.
“As many East Coast markets were digging out from the blizzard last week, purchase applications fell, another indication that housing demand remains relatively weak,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “With home prices continuing to drift amid an abundant inventory of homes on the market, potential homebuyers do not see any urgency to lock in purchases.”
The four-week moving average is down 2.1 percent for the seasonally-adjusted purchase index, while the moving average is up 3.2 percent for refinances.
The average interest rate for 30-year fixed-rate mortgage contracts climbed to 5.03 percent from 4.94 percent, with points increasing to 1.34 from 1.09 for 80 percent loan-to-value ratio loans, the MBA said. The average interest rate for 15-year fixed-rate mortgages increased to 4.35 percent from 4.33 percent, with points increasing to 1.31 from 1.02.
The MBA survey covers more than 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.
