FOX Business correspondent Madison Alworth shares why for many first-time homebuyers, the American dream is delayed as a result of high mortgage rates and home prices on 'Varney and Co.'
A key measure of home-purchase applications rose for the first time in a month last week as consumer demand stirred back to life amid a sharp drop in mortgage rates.
The Mortgage Bankers Association's (MBA) index of mortgage applications rose 2.5% last week, compared with the previous week, according to new data published Wednesday.
The data also showed that the average rate on the popular 30-year loan plunged to 7.61%, marking the biggest single-week decline since mid-2022.
"Last week’s decrease in rates was driven by the U.S. Treasury’s issuance update, the Fed striking a dovish tone in the November FOMC statement, and data indicating a slower job market," said Joel Kan, MBA's deputy chief economist.
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Available home supply remains down a stunning 45.1% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com. (David Paul Morris/Bloomberg via / Getty Images)
The decline in rates helped to spur more housing demand, with applications for a mortgage to purchase a home also rising 1% for the week. Still, application volume remains down 20% compared with the same time last year.
Demand for refinancing also inched higher last week, rising 2% from the previous week, according to the survey. Compared with the same time last year, refinance applications are down 7%.
"Applications for both purchase and refinance loans were up over the week but remained at low levels," Kan said. "The purchase index is still more than 20% behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.
"MORTGAGE RATES CONTINUE TO HOVER NEAR HIGHEST LEVEL SINCE 2000
The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve's aggressive tightening campaign. Policymakers have already lifted the benchmark federal funds rate 11 consecutive times in an attempt to crush stubborn inflation and slow the economy.
Officials signaled during their policy-setting meeting in September that another rate hike is on the table this year – and that rates are likely to remain elevated for some time. But many economists believe the central bank is done raising interest rates, which has helped to bring down painfully high mortgage rates.
The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve's aggressive tightening campaign. (David Paul Morris/Bloomberg via / Getty Images)
The higher mortgage rates are not only dampening consumer demand, but they are limiting inventory. That is because sellers who locked in a low mortgage rate before the pandemic have been reluctant to sell with rates continuing to hover near a two-decade high, leaving few options for eager would-be buyers.
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A recent report from Realtor.com shows that the total number of homes for sale, including those that were under contract but not yet sold, fell by 4% in September, compared with the same time a year ago.
Available home supply remains down a stunning 45.1% from the typical amount before the COVID-19 pandemic began in early 2020, according to the report.
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November 08, 2023 at 11:52PM
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Mortgage demand stirs back to life as interest rates plummet - Fox Business
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