Several headwinds finally appear to be taking a toll on the blazing housing market, with the Mortgage Bankers Association reporting that its Market Composite Index (MCI) fell to its lowest level since February last year.
The overall MCI, a measure of mortgage loan application volume, decreased 4.0% on a seasonally adjusted basis from one week earlier, marking the second week in a row — and the 15th since the start of the year — that mortgage applications declined.
The Refinance Index decreased 5% weekly but up 6% annually. The seasonally adjusted Purchase Index was down 3% from the prior week; unadjusted, the Purchase Index was down 5% weekly and 2% annually.
“Tight housing inventory, obstacles to a faster rate of new construction and rapidly rising home prices continue to hold back purchase activity … Purchase applications were down almost 2 percent from a year ago, but that was compared to the week of Memorial Day 2020,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting.
“Refinance activity dropped for the second straight week, even as the 30-year fixed rate decreased slightly to 3.17%. Even though rates have been below 3.20% over the past month, they are still around 20-30 basis points higher than the record lows in late 2020.”
Notably, Kan observed that the government purchase index fell to its lowest level in over a year, decreasing annually for five straight weeks.