U.S. mortgage rates fell to another all-time low last week, while the size of new purchase loans hit a fresh record high, amid a lack of new homes on the market and steadily-increasing prices.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $510,400 fell 3 basis point to 3.26% for the week ending July 3, a new all-time low that's more than half a percent lower than in March of this year.
The MBA's refinancing index rose 0.4% to 3,373.9 points, snapping a series of weekly declines, while applications jumped 2.2%. The seasonally-adjusted Purchase Index, which tracks mortgage applications for the purchase of a single family home, rose 5.3% to 775.9 points, while the average purchase loan size climbed to a record $365,700, thanks in part to a dearth in new supply and rising home prices.
“Purchase applications continued their recovery, increasing 5% to the highest level in almost a month and 33% from a year ago," said Joel Kan, the MBA’s associative vice president of economic and industry forecasting. “Refinance applications increased slightly, driven by a 2% rise in conventional refinances. Overall refinance activity was up 111% from last year.”
U.S. homebuilding rebounded in May, according to recent data from the the Commerce Department, which noted that housing starts rose 4.3% to a seasonally adjusted 974,000 units.
However, the pace of construction is still some 23.2% lower than last year, and single-family home starts edged only 0.1% higher in May to a pace of 675,000 units.
U.S. home prices rose 4.7% in April, the S&P CoreLogic Case-Shiller index indicated last week, with prices in its 20-city composite index notching the biggest gains since December 2018.
"April's year-over-year gains were ahead of March's, continuing a trend of gently accelerating home prices that began last fall," said Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. "Results in April continued to be broad-based. Prices rose in each of the 19 cities for which we have reported data, and price increases accelerated in 12 cities."
The National Association of Realtors said its index of pending home sales rose by a record 44.3% in May, as well, following its historic April decline, as buyers returned to the market enticed by low mortgage rates and improving job prospects.