Two major indicators point to a sluggish housing market with more uncertainty for the summer months ahead as both mortgage applications and existing home sales are easing.
The Mortgage Bankers Association today said its overall applications index last week decreased 6 percent from the previous week. Despite mortgage rates at or near historic lows, even refinancing slowed.
The MBA’s refinance index dropped 7.3 percent from the previous week, while the index that gauges just home purchase applications slipped 1.2 percent.
In another report, existing home sales for May unexpected slipped 2 percent to a seasonally adjusted annual rate of 5.66 million units. But it was down from an upwardly revised rate of 5.79 million in April. Sales compared to a year ago were up 19.2 percent.
Still, analysts expected a jump in re-sales of more than 6 million units.
Much of the May activity reflected closings from the surge in contract signings generated by the homebuyer tax credits, which expired April 30. Under the program, homebuyers have until the end of this month to close. The figures on existing home sales are based on transaction closings.
Lawrence Yun, chief economist with the National Realtors Association, said there are delays being reported that may push tax credit-related closing into July, especially those involving short sales. Lawmakers are expected to extend the closing deadline.
“Approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales,” Yun said.
He also said that many potential sales are being delayed by the expiration of the National Flood Insurance Program, which offers more affordable premiums than the private sector.
“Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance,” Yun said.
See Related Article: