U.S. home-purchase applications have hit their lowest point since February, revealing that sky-high housing prices are outmuscling the benefits of dipping mortgage rates.
Last week, the Mortgage Bankers Association (MBA) reported a 5.2% drop in their index, lowering it to 130.6.
This signals that the housing market’s pulse remains weak, despite the recent decline in borrowing costs.
Refinancing applications, which had recently surged to a two-year high, also took a nosedive.
The contract rate on a 30-year fixed mortgage slipped by 4 basis points to 6.5%, marking its lowest since May of last year, according to MBA data released Wednesday.
Yet, not all rates followed suit—the 15-year fixed mortgage rate nudged upward, and the average five-year adjustable mortgage saw its biggest jump since early 2024.
Mortgage rates often reflect the movements of U.S. government securities, and the recent decline in the 10-year Treasury yield has fueled speculation.
Many now anticipate that the Federal Reserve may trim its benchmark interest rate next month.
All eyes will be on Fed Chair Jerome Powell and his colleagues as they take the stage at the central bank’s annual symposium in Jackson Hole, Wyoming, later this week.
However, even with the hint of easier monetary policy on the horizon, housing affordability remains a distant dream for many.
The soaring home prices have eroded affordability to near-historic lows, making it tough for potential buyers to catch a break in this challenging business environment.
The MBA’s weekly survey, running since 1990, captures a broad swath of the market, reflecting over 75% of all retail residential mortgage applications in the U.S.
Despite the fluctuations, the message remains clear: until home prices come down, the door to homeownership may stay shut for many Americans.
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