Higher Mortgage Rates, Economic Uncertainty Behind Falling Home Buying Inquiries
New homebuyer applications fell 12% year-over-year in June due to rising mortgage rates and economic uncertainty, according to the survey of homebuilder applications. Mortgage Bankers Association (MBA). Month over month, the volume of requests fell by 10%.
New residential construction and permitting activity weakened from March to May, reducing the number of homes available to buyers, according to the survey results.
MBA estimates that about 620,000 new single-family homes were sold in June at a seasonally adjusted annual rate, marking a decline of 15%, or more than 100,000 homes, from May.
“Rising mortgage rates and heightened economic uncertainty dampened borrower demand in June, causing new home purchase applications to fall to the lowest level since April 2020,” said Joel Kan, vice president. associate of economic and industrial forecasts at the MBA.
Mortgage rates have been volatile over the past few weeks, following Federal Reserveinterest rate hike of 75 basis points last month. After falling by 40 basis points two weeks ago to 5.30%, mortgage rates rose last week to 5.5%, according to the latest Freddie Mac PMM.
The average loan size fell to $426,966 in June from $430,855 in May, MBA said.
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Conventional loans accounted for 73.7% of loan applications. Federal Housing Administration (FHA) loans accounted for 15%, veterans affairs (VA) loans represented 10.7% of total applications and Rural Housing Service (right) and united states department of agriculture (USDA) contributed 0.5%.
The survey tracks the volume of applications from mortgage affiliates of homebuilders across the country. Using this data, MBA provides an initial estimate of new home sales volumes at the national, state and metro level.