WASHINGTON (7/17/14)--Mortgage applications fell during the week ending July 11, driven by a sizable drop in purchase applications, according to the Mortgage Bankers Association's (MBA) mortgage applications survey, released Wednesday.
Purchase applications sank 7.6% from the prior week to their slowest pace since February and sit 9.9% below levels seen last year at this time.
The MBA's composite index declined 3.6% and has reached its lowest mark since December 2000. Mortgage rates climbed narrowly by 1 basis point to 4.33%, but remain 3 points lower than rates seen a month ago.
"Housing demand from traditional homebuyers who purchase homes with credit remains weak on a historical basis," said Brent Campbell, Moody's analyst (
July 16). "Memories of the recent housing crash have encouraged more households to rent their dwellings instead of buy."
Perhaps reflecting a trend that consumers have become more mindful of debt, the mortgage default rate dropped for the eighth consecutive month in June, slipping to 0.89% from 0.92% in May, and 1.24% year-over-year, according to the S&P Experian Consumer Credit Default Indices (
July 15). Second-mortgage default rates remained at .57%.
A drop in purchase activity also seems in line with recent data from Veros Real Estate Solutions, which found that 80% of real estate markets throughout the United States are experiencing price appreciation, potentially signaling a still-tight supply of homes on the market.
But the housing tide could be changing.
Veros also reported that nationwide appreciation has slowed in recent months, based on the company's VeroFORECAST tool that predicts real estate trends for more than 1,000 counties and 340 metro areas.
Further, homebuilder confidence rebounded strongly this month, as the National Association of Home Builders composite index from Wednesday climbed 4 points to 53 from 49 in July, the highest it's been since January.
The future sales index in particular showed promising gains with a 6-point surge. All four regions in the United States saw improvements for future purchases this month, with confidence above 50 in all regions except the Northeast.
The government will release data on new housing construction today.