Even as mortgage rates dipped for a third straight week, demand for the home loans fell last week, sapped by a shortage of listings and sky-high prices.
In the week through April 23, an index measuring applications for home purchases decreased about 5%, the fourth decline in the last five weeks, according to data released by the Mortgage Bankers Association (MBA) Wednesday. An index of refinancing activity also shrank slightly, declining 1% in the seventh drop in eight weeks.
Meanwhile, the average rate for a 30-year fixed mortgage fell to 3.17% from 3.20% the previous week, the lowest average since mid-February, but higher than the record low of 2.85% in December.
Historically low mortgage rates have helped fuel a pandemic boom in the housing market, but as the supply of homes on the market falls short of the demand from potential buyers, the demand for financing is also dwindling. Adding to deterrents is a surge in sale prices to record highs. The median price for a single-family home broke yet another record in March, jumping 18.4% from the year earlier to $334,500.
The recent decline in rates hasn’t revived refinancing activity because most borrowers who could refinance having probably already done so, the MBA theorized.