Despite the lower rates, mortgage applications have remained stagnant.
“Lower rates, however, were still not enough to entice refinance borrowers back, as most continue to hold mortgages with considerably lower rates,” said Joel Kan, deputy chief economist of the Mortgage Bankers Association.
Refinance applications were 26% higher than the same week one year ago, while home purchase applications increased by 1% week-over-week.
The housing market continues to face affordability challenges, with the median sale price of a new home in May at $417,400. New single-family home sales fell 11.3% last month to an annual pace of 619,000, underperforming economists’ expectations.
“Families are delaying purchases of new homes because of high mortgage rates,” said NerdWallet mortgage expert Holden Lewis. “The average rate on a 30-year mortgage was 7.06% in May. In May 2023, the average rate was 6.43%. So it’s little surprise that new home sales were 16.5% lower in May compared to a year before — even though the median price dropped 1%. Sales will rebound when mortgage rates drop to 6.5% or lower.”
