The summer housing market is facing ongoing challenges following a disappointing spring season. Despite the anticipation for an improvement, the current state of affairs is far from ideal. The high prices of homes persist, mortgage rates remain at elevated levels, and there is only a slight uptick in the number of homes being listed. These factors are reflected in the stagnant weekly mortgage demand, which has remained unchanged for two consecutive weeks.
According to the Mortgage Bankers Association, total mortgage application volume showed minimal growth of just 0.8% compared to the previous week. The average contract interest rate for 30-year fixed-rate mortgages saw a slight decrease, falling to 6.93%. However, this drop was not significant enough to stimulate refinance activity. Applications to refinance a home loan remained flat week over week, but were considerably higher compared to the same period last year.
Lingering Supply Issues
While total housing supply has increased by 18% year-over-year, the market is still experiencing supply shortages. This scarcity of available homes continues to put pressure on potential buyers. Purchase applications did see a slight increase, especially in government purchase loans such as FHA and VA loans, indicating some demand among buyers in these segments. However, overall purchase applications were 13% lower compared to the same period last year.
The current trend in mortgage rates is relatively stable, with little movement expected in the near future. However, market analysts are eagerly awaiting the release of important reports on consumer spending and personal consumption expenditures prices later in the week. Any indications of inflation in these reports could potentially impact bond yields and subsequently mortgage rates.
The summer housing market is grappling with various challenges that are hindering its growth. The persistent high prices of homes, stagnant mortgage demand, and supply shortages continue to be major obstacles for both buyers and sellers. While there are slight glimmers of hope in certain segments of the market, the overall outlook remains uncertain. It will be crucial to monitor upcoming economic reports to gauge the direction in which the housing market is heading.