Weekly Mortgage Applications near 8-Year Low
We are coming up to the time of year when real estate usually slows down. Homeowners didn’t see a bottom this summer and there is more bad news:
- Mortgage application volume fell last week to its lowest level in nearly eight years, the Mortgage Bankers Association said Wednesday.
- On Tuesday, a Commerce Department report showed construction of homes and apartments fell in July to the lowest level in more than 17 years.
- A sharp drop in refinance volume in recent weeks has been the leading driver of declining application volume.
These leading indicators are showing a declining trend for future real estate prices. What may add to this decline is the possibility of interest rates rising due to inflation. Higher interest rates will make it more expensive for home buyers, thus reducing demand. Combine all this with the usual fall/winter slowdown, I don’t see the real estate market bottoming until the middle of next year.