Buyer Demand Shows Signs of Strengthening
By Melissa Dittmann Tracey
Mortgage applications for home purchases climbed to the highest level in more than a month, even as interest rates barely budged.
CHICAGO – Although this spring hasn’t been a lively home-sales period nationally — sales remain near a 30-year low — “the latest mortgage application data is clearly showing some positive encouragement,” says Lawrence Yun, chief economist of the National Association of Realtors®.
For the week ending June 6, mortgage applications were up 20% compared to the same week a year ago, according to the Mortgage Bankers Association. The uptick comes even as mortgage rates have held relatively steady.
“Despite ongoing uncertainty surrounding the economy, home buyers seem to be taking advantage of loosening housing inventory in certain markets,” says Joel Kan, deputy chief economist at MBA.
In fact, housing inventory is up 20% year over year. But if looked at nationally, those additional listings haven’t yet translated into more closed sales this spring.
Mortgage rates remain the critical factor. Yun says he’s closely watching inflation data and the Federal Reserve’s next move on its short-term benchmark. If mortgage rates dip—even down to around 6.5% — he believes it could trigger a meaningful turnaround, boosting sales activity by as much as 10%.
“Even incremental, small changes [in mortgage rates], I think, will bring more buyers,” Yun says.
The latest on mortgage rates
“Mortgage rates have moved within a narrow range for the past few months—and this week is no different,” says Sam Khater, Freddie Mac’s chief economist. However, “rate stability, improving inventory and slower house price growth are an encouraging combination as we celebrate National Homeownership Month.”
Freddie Mac reports the following national averages with mortgage rates for the week ending June 12:
30-year fixed-rate mortgages: averaged 6.84%, down slightly from last week’s 6.85% average. A year ago, 30-year rates averaged 6.95%.
15-year fixed-rate mortgages: averaged 5.97%, down from last week’s 5.99% average. A year ago, 15-year rates averaged 6.17%.
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