Mortgage rates stopped their downward spiral two weeks ago, and it seems homebuyers are taking notice.
Total mortgage applications dropped 10.1% over the last week, with refinance applications decreasing the most, according to the Mortgage Bankers Association. Refinancing dipped 15% from last week, while purchase applications dipped just 3%.
Interest rates on 30-year fixed-rate mortgages have jumped 0.20% in the last two weeks, according to MBA. Freddie Mac, which only tracks conventional loans, shows rates rising even more, jumping from 3.49% earlier this month to 3.73% as of last Thursday.
It’s not all bad news for homebuyers, though. Yesterday’s House Price Index from the Federal Housing Finance Agency show prices trending upward—but at a much slower pace than last year (5% over the year vs. 6.7% last year). In some cities, like New York, Los Angeles, and Washington, D.C., prices even declined.
Additionally, new single-family construction starts were up 4.4% in August, while completions were up 3.7%. According to the Census Bureau, new home sales jumped 7.1% in the last month and 18% over the year.
The stats indicate a promising market lies ahead, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“The recent data on increased existing-home sales and new residential construction points to the underlying strength in the purchase market this fall,” Kan said.
Despite this week’s downslide, refinances are still up 104% from last year, while purchase applications are up 9% for the same period.