Last week, Mortgage applications fell more than 6%, to a 22 year low according to the Mortgage Bankers Association.
“Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand,” MBA economic forecaster Joel Kan said in a statement. “The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”
Mortgage refinancing has also hit its lowest levels since 2000, with the MBA’s Refinance Index falling 4% in the past week and plummeting 80% in the past year.
Existing home sales also declined for the fifth straight month in June, according to the National Association of Realtors and year over year sales are now down 14.2% from June 2021.
The Fed is expected to raise interest rates by at least another .75 when they meet again next week and likely several more rate hikes of .75 or larger before the end of the year. This is going to accelerate the decline in mortgage applications, as well as the decline in home builder confidence, which saw a near record plunge this month.
NAHB Chair Jerry Konter said “production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction, as the cost of land, construction and financing exceed a home’s market value in some cases.”
Pantheon Macro chief economist Ian Shepherdson also warned that confidence has “further to fall” and declared that we are already “in a meltdown”.
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