Purchase Mortgage Apps Rise for Third Consecutive Week

According to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey for the week ending June 23, 2023, mortgage applications rose 3% week-over-week, amid a continued volatile rate environment.

Slightly lower mortgage rates caused the MBA’s Refinance Index to increase 3% from the previous week, and yet remained 32% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3% from one week earlier, while the unadjusted Purchase Index decreased 8% compared with the previous week, and was 21% lower than the same week one year ago.

“Mortgage rate changes varied across loan types last week, with the 30-year fixed rate increasing slightly to 6.75%. The spread between the jumbo and conforming rates widened to 16 basis points, the third week in a row that the jumbo rate was higher than the conforming rate. To put this into perspective, from May 2022 to May 2023, the jumbo rate averaged around 30 basis points less than the conforming rate,” said Joel Kan, MBA’s VP and Deputy Chief Economist. “Purchase applications increased for the third consecutive week to the highest level of activity since early May, but remained more than 20% lower than year ago levels. New home sales have been driving purchase activity in recent months, as buyers look for options beyond the existing-home market. Existing-home sales continued to be held back by a lack of for-sale inventory, as many potential sellers are holding on to their lower-rate mortgages.”

And as rates fell sightly, the MBA reported the refinance share of mortgage activity increased to 27.2% of total applications from 26.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1% of total applications.

By loan type, the FHA share of total applications decreased to 12.9% from 13.3% the week prior. The VA share of total applications increased to 12.2% from 11.9% the week prior. The USDA share of total applications remained unchanged at 0.4% from the week prior.

The U.S. Census Bureau and the U.S. Department of Housing & Urban Development (HUD) have announced the following new residential sales statistics for May 2023 and reports thar sales of new single‐family houses in May 2023 were at a seasonally adjusted annual rate of 763,000—12.2% above the revised April 2023 rate of 680,000, and is 20% above the May 2022 estimate of 636,000.

“May also saw the second largest increase on record for sales of new homes that have not yet been started, which surged by 79% to a SAAR of 195,000, the highest level since January 2022,” said Doug Duncan, Chief Economist at Fannie Mae. “While some of this may be statistical noise, it suggests further support for new home construction over the coming months. Given these reports, we will likely be revising upward our new home sales and housing starts forecasts for the remainder of the year.”

Home builder confidence continues to rise, as the National Association of Home Builders (NAHB), in its latest NAHB/Wells Fargo Housing Market Index (HMI), reported builder confidence for newly built single-family homes in June 2023 rose five points to 55—marking the sixth consecutive month that builder confidence has increased.

“A bottom is forming for single-family home building as builder sentiment continues to gradually rise from the beginning of the year,” said NAHB Chief Economist Robert Dietz. “This month marks the first time in a year that both the current and future sales components of the HMI have exceeded 60, as some buyers adjust to a new normal in terms of interest rates. The Federal Reserve nearing the end of its tightening cycle is also good news for future market conditions in terms of mortgage rates and the cost of financing for builder and developer loans.”