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According to data published this Wednesday by the Association of Mortgage Bankers the mortgage applications index fell 2.9% last week, this being its lowest level in 27 years.
For Joel Kan, MBA Deputy Chief Economist “mortgage applications fell to the lowest level since December 1996despite the drop in mortgage rates,” the analyst told Fox.
And it is that consumer demand has cooled due to the constant increases in mortgage rates. “Both purchase and refinancing applications fell, and the purchase index hit its lowest level in 28 years as potential buyers remain sidelined due to low home inventory and high mortgage ratesKan said.
A low blow for the real estate market
The real estate market is stalling as mortgage rates rise, the report from two weeks ago showed it peaked at 7.31% for a 30-year loan, which has also led to the volume of requests has dropped to 28%.
For its part, the report from the National Association of Realtors (NAR) revealed that sales of existing homes in the United States fell 2.2% in July, that’s 16.6% compared to last year.
In this sense, Lawrence Yun, chief economist at NAR, highlighted that there are two main factors that have been driving current sales activity “inventory availability and mortgage rates. Unfortunately, both have been unfavorable to buyers.”, said.
While for respite from the real estate market, new home construction rose 3.9% in July amid high mortgage rates, but for Alicia Huey, president of the NAHB, “rising mortgage rates and high construction costs stemming from the A shortage of construction workers, a lack of building lots and a continued shortage of distribution transformers dampened builder sentiment in August,” he said.
Finally in a report presented by Realtor.com. chief economist Danielle Hale added that “the inventory crisis continues to exert pressure rise in home prices, amplifying concerns about affordability and putting some potential buyers off the market,” he said.
Keep reading:
- A shortage of skilled labor is affecting the US construction and manufacturing industries.
- Existing home sales in the US fell 2.2% in July
- Mortgage rates reached 7.9%, the highest level in more than 20 years