US mortgage rates rose to the highest since November last week, putting further pressure on would-be buyers even as a spate of recent data suggested the housing market staged a recovery in January.
At 6.71%, the 30-year fixed is now within ~40bps of last year’s highs. Suffice to say the tightening in financial conditions spearheaded by the hawkish repricing across the US rates complex in February is now curbing whatever animal spirits might’ve been stirring on Main Street.
Or at least that’s the impression one gets from the latest MBA data. Applications dropped 6% last week, the third consecutive weekly decline.
The index fell to a new 28-year low. It was the second straight week that the gauge touched levels not seen since 1995.
Mortgage rates are up a half-point over the past month alone, and that’s stifling what MBA VP and deputy chief economist Joel Kan described as a “brief revival” for housing activity in January.
Kan made direct reference to last month’s bond market tumult, and the hot data behind it. “Data on employment and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates,” he said.
Apparently, the situation is now so vexingly ambiguous that everyone involved — from buyers, to sellers to agents representing both sides of the market — is exasperated with houses.
“Across the country, would-be homebuyers and their real estate agents — and even some on the seller’s side — describe a sense of deep fatigue,” a sad article published to Realtor.com’s website said. “Things are so difficult that even though some people might keep searching, they’ve lost their enthusiasm — rather than a buyer’s market or seller’s market, this is better characterized as a ‘nobody’s market.'”
Measured against the same period a year ago, purchase applications were down 44% last week, the MBA said. Refi activity is still moribund for obvious reasons, and is running some 70% behind 2022’s pace.
