Lede

Despite a decrease in mortgage rates, the housing market continues to suffer from a lack of supply, with new listings down 20% year over year and total inventory half of what it was in March 2019.

Summary

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.40% from 6.45%, but mortgage applications to purchase a home dropped 4% last week compared to the previous week, with demand 35% lower than the same week one year ago.
• New listings were down 20% year over year in March, according to Realtor.com, and total inventory was about half of what it was in March 2019, pre-Covid pandemic.
• Applications for Federal Housing Administration and Department of Veterans Affairs loans, favored by lower-income borrowers due to low down payment requirements, declined more than those for conventional loans.
• While there is strong demand from first-time homebuyers, with millennials hitting their peak buying age, affordability remains a challenge, and most jumbo loans are held on bank balance sheets.
• Refinance applications also dropped 5% for the week and 59% lower than the same week a year ago, with rates 150 basis points higher than they were at the same time last year, so there are precious few borrowers who can now benefit from a refinance.