(Reuters) – The number of mortgage applications in the United States fell last week, due to a decline in refinancing and buying activity as mortgage rates rose.
The Mortgage Bankers Association (MBA) said on Wednesday that its seasonally adjusted stock index fell 4.0% in the week ended July 16 from the previous week. This reflects a 2.8% drop in requests to refinance existing loans, while purchase requests fell 6.4% to their lowest level since May 2020.
The average contractual interest rate for traditional 30-year mortgages rose to 3.11%, from 3.09% the week before. Last week, the average contractual interest rate fell to its lowest level since February.
“Limited inventory and higher prices are keeping some potential buyers out of the market,” Joel Kan, associate vice president of economic and industrial forecasting at MBA, said in a statement.
“Refinancing activity fell during the week, but as rates remained relatively low, the pace of applications was close to its highest level since early May 2021,” the statement added.
This week’s data comes just a day after the Commerce Department said housing starts accelerated in June, while building permits fell to their lowest level in eight months.
Additionally, US homebuilder confidence fell to an 11-month low in July, due to both supply and labor shortages.
“As construction companies strive to balance the costs of timber returning to the land with rising labor and development costs, the shortage of around 4.0 million homes on the market remains a hurdle to overcome, ”said George Ratiu, senior economist at Realtor.com.
“Millions of buyers are willing and able to buy, if only they can find the right home at an affordable price.”
Reporting by Evan Sully; Editing by Peter Cooney