U.S. Mortgage rates edged higher last week, but purchase applications continued to increase as larger states ease coronavirus lockdown restrictions, and existing home sales look set to fall sharply in April.
The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $510,400 rose 3 basis points to 3.43% for the week ending May 8, just above the record low of 3.4% and a full 1% lower from the same period last year. The MBA's refinancing index fell 3.3% to 3,709.3 points but applications rose by 0.3% from the previous week as the ten largest states in the survey, led by New York, showed double-digit gains. The seasonally-adjusted Purchase Index increased 11% from the prior week, the MBA said.
“There continues to be a stark recovery in purchase applications, as most large states saw increases in activity last week," said the MBA's vice president of economic and industry forecasting Joel Kan. “We expect this positive purchase trend to continue – at varying rates across the country – as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring homebuying season.”
“Mortgage rates stayed close to record-lows, but refinance applications decreased for the fourth consecutive week, driven by a 5% drop in conventional refinances," he added. "Despite the downward trend over the last month, mortgage lenders remain busy. Refinance activity was up 200% from a year ago.”
Existing home sales fell the most in more than 4 years in March, the Commerce Department said on April 21, to a seasonally adjusted annual rate of 5.27 million units, while the National Association of Realtors pending home sales index fell 16.3% from the same period last year.
Just 1.5 million previously-owned homes were on the market in March, according to the NAR, down 10.2% from last year and the lowest tally on record. Median prices, however, rose 8% from last year to $280,600 nationwide.
“Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” said Lawrence Yun, NAR’s chief economist, at the time. “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
The NAR's April sales data will be published on May 21.