Homebuyers’ appetite waned last week after two months of growth.
An index tracking mortgage applications to buy homes fell 3 percent, seasonally adjusted, after nine weeks of gains had pushed the metric to an 11-year high.
The Mortgage Bankers Associated metric had been rising as prospective buyers readied for the end of pandemic lockdowns, but fell in the third week of June, according to the trade group’s weekly report.
Joel Kan, MBA’s executive at the helm of industry forecasting, maintained that the purchase market is “strong” and blamed the decrease on a lack of supply.
“One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market,” he said in a statement.
Kan added that additional inventory “is needed to give buyers more options and to keep home prices from rising too fast.”
Some homeowners have pulled listings or kept their homes off the market, waiting for the economy to improve. That kept prices from falling when demand did in April.
MBA’s index measuring applications to refinance also dropped last week, falling by 12 percent from the prior week and breaking a two-week streak of increases. The refinance index remained up 76 percent year-over-year, however, thanks to low interest rates and some homeowners’ need for cash.
MBA’s overall index, which covers 75 percent of the residential mortgage market’s weekly applications for purchase and refinance loans, was down 8.7 percent week-over-week.
The 30-year fixed mortgage rate remained at a record low of 3.30 percent for loans of less than $510,400. Jumbo rates fell 5 basis points to 3.62 percent.
Write to Erin Hudson at [email protected]