(PatrioticPost.com)- The pandemic-era demand for mortgage refinancing is slowing down as interest rates are raised to slow down inflation.
According to the Mortgage Bankers Association, refinancing demand dropped 14 percent from the previous week and 54 percent from the same time last year. The refinance share of mortgage activity also fell to 44.8 percent from nearly 50 percent the previous week.
Meanwhile, total mortgage applications dropped 8.1 percent in the previous week as the average 30-year fixed-rate mortgage interest increased from 4.27 percent to 4.5 percent. Home purchase applications fell by 2 percent compared to the previous week and are down 12 percent from a year ago.
Sales of new single-family homes fell in February due to rising mortgage rates and higher home prices squeezing out first-time buyers. However, sales remained above their pre-pandemic level.
In February, new home sales dropped 2 percent to a seasonally adjusted annual rate of 772,000 homes. January’s new home sales were revised down to 788,000. In the Northeast, sales surged 59.3 percent while in the Midwest, they increased 6.3 percent. But in the densely populated south, sales dropped 1.7 percent while in the West, sales tumbled 13 percent.
New home sales, which account for 11.4 percent of home sales, are a major indicator for the housing market.
Economists surveyed by Reuters had forecast new home sales would rebound to 810,000. Sales dropped 6.2 percent year on year in February. Sales peaked at 993,000 in January 2021, the highest since the end of 2006.
In February there were 407,000 new homes on the market, up from 398,000 in January. Homes under construction accounted for 65 percent of the inventory while homes yet to be built accounted for about 26 percent.
Due to shortages and higher prices for lumber, the backlog of homes approved for construction but not yet under construction is at an all-time high.
At the pace of sales in February, it would take 6.3 months to clear the supply of homes on the market, up from 6.1 months in January.