Mortgage News Daily

Mortgage demand shocked no one by declining last week as mortgage rates climbed to their highest level in nearly three years. The Mortgage Bankers Association (MBA) reported a 6% drop in total mortgage application volume for the week ending September 25. Both sides of the market moved lower, with the seasonally adjusted Purchase Index falling 4% and refinance applications dropping 9% . MBA said purchase and refinance activity both reached their slowest weekly pace since 2025 . Refinances always get hit hardest by rate spikes with the index now 56% lower than a year earlier. Government refinance applications fell 13% from the prior week. "Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines," said Joel Kan, MBA's Vice President and Deputy Chief Economist. He noted that the 30-year fixed rate reached 7.30%, its highest level since November 2023. There was another sign that some borrowers are looking for alternatives to the traditional fixed-rate mortgage. ARM loans accounted for 10.3% of all applications, the highest share since October 2025. Kan said ARM rates were roughly 80 basis points below fixed rates, although the average 5/1 ARM rate also moved higher in the latest survey. Mortgage Rate Summary: 30yr Fixed: 7.30% (from 7.12%) | Points: 0.75 (from 0.73) 15yr Fixed: 6.56% (from 6.43%) | Points: 1.02 (from 1.15) Jumbo 30yr: 7.27% (from 7.15%) | Points: 0.50 (from 0.53) FHA: 6.97% (from 6.78%) | Points: 1.18 (from 0.96) 5/1 ARM: 6.47% (from 6.10%) | Points: 1.20 (from 0.76)

Home prices picked up a little more speed in July, as both FHFA and the S&P Cotality Case-Shiller Home Price Indices showed stronger annual appreciation than in their previous readings. The gains remain relatively modest by historical standards, and while nominal prices are still moving higher nationally, the picture looks considerably less impressive after accounting for inflation. The FHFA House Price Index rose 0.3% from June to July, bringing the annual increase to 2.6% . While the national market is still technically appreciating, there's more and more variation between different metro areas with some holding steady or even contracting. Case-Shiller tells a similar story, though its national measure is running at a somewhat slower pace. The U.S. National Home Price Index rose 1.9% year over year in July, up from 1.6% in June. The 10-City Composite increased 3.4% , while the 20-City Composite was up 2.5% . The annual price appreciation chart shows a nice little uptick, but the takeaway is tempered in inflation-adjusted terms. Both of the big U.S. inflation reports showed annual changes of 3.4% last month, and even higher in July (the month that lines up with these home price reports). Any way you slice it, that means home prices aren't keeping pace with broader inflation. Whether or not that's a bad thing is another story. Some would say it wouldn't be the end of the world for prices to merely hold steady and allow income growth to slowly chip away at affordability. 

The new home market returned to the longer-term range last month, with sales seeing their 4th biggest rebound in 4 years.  Sales of new single-family homes rose to a seasonally adjusted annual rate of 684,000 in August, up 6.4% from July's revised 643,000 but 2.0% below the same month last year. The increase puts sales back above the 600,000 mark after July's pullback, although the broader trend remains relatively flat. The number of new houses for sale was virtually unchanged at 483,000 , down 2.0% from a year earlier. With sales picking up while inventory held steady, the implied supply fell to 8.5 months , down from 9.0 months in July and essentially unchanged from August 2025. Pricing was mixed, the median sales price edged up to $393,700 , a 0.4% increase from July but 5.8% below August 2025. The average sales price fell to $478,700 , down 9.1% from July and 8.8% from a year earlier. As a reminder, price movements in this data set are not necessarily apples to apples as they don't adjust for changes in square footage, neighborhood, etc. Sales (MoM): +6.4% Sales (YoY): -2.0% Inventory (MoM): 0.0% Inventory (YoY): -2.0% Months' Supply: 8.5 (down from 9.0 prior month; 8.5 YoY) Median Price: $393,700 Average Price: $478,700

Mortgage demand remained subdued last week as the 30-year fixed rate climbed above 7%. The Mortgage Bankers Association (MBA) reported a 1.5% decline in total mortgage application volume for the week ending September 18, following a 4.1% drop the week before.  Purchase activity was the only saving grace. While technically 1% lower week-over-week, it has generally been moving sideways for the past few weeks.  Refinance demand was more sluggish. The Refinance Index declined another 3% and was 62% lower than a year earlier. MBA said the pace of refinancing has now reached its slowest level since February 2025 , a reflection of how few existing borrowers can benefit from replacing their current mortgage with one carrying today's higher rate. "Mortgage rates vaulted higher last week, with the 30-year fixed rate at 7.12 percent – the highest level since May 2024," said Mike Fratantoni, MBA's SVP and Chief Economist. He added that the higher fixed rates prompted more borrowers to consider adjustable-rate mortgages, even as both purchase and refinance applications continued to decline. The shift toward ARMs was one of the more notable developments in the latest data. ARMs accounted for 9.8% of application volume, up from 8.4% the week before. The average rate for a 5/1 ARM fell to 6.10%, putting it more than a full percentage point below the 30-year fixed rate. That spread is large enough to make the adjustable option more noticeable to borrowers facing 7% or higher fixed rates.

Pending home sales edged higher in August as gains in the South and West offset declines in the Northeast and Midwest. The National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI), which tracks signed contracts on existing homes, increased 0.3% from July but was down 4.7% from a year earlier. The modest increase came despite another period of elevated mortgage rates. NAR Chief Economist Lawrence Yun said income growth has been outpacing home price growth, but higher borrowing costs continue to limit the resulting improvement in buying power and housing demand. Pending sales remain roughly 30% below pre-pandemic levels nationally. Activity peaked in 2021 when mortgage rates were near 3%, suggesting that lower borrowing costs remain an important factor in bringing sidelined demand back into the market. Regional Results Area Monthly Change Annual Change Additional Detail Northeast -4.2% -3.9% Among the fastest home price growth Midwest -1.6% -4.9% Among the fastest home price growth South +2.3% -3.8%   West +3.0% -6.7%  

Residential construction was mixed in August as housing starts recovered in the single-family sector, while building permits declined from July levels and completions fell sharply. The latest Census Bureau data points to continued unevenness in residential construction, with builders pulling back somewhat on new authorizations even as single-family construction picked up. Privately owned housing starts fell 2.6% to a seasonally adjusted annual rate of 1.275 million , down 1.2% from the August 2025 pace. Single-family starts, however, increased 7.6% to 918k , while starts for buildings containing five units or more fell to 344k . Building permits moved in the opposite direction, declining 2.7% from July to an annual rate of 1.394 million , though they remained 3.5% above the August 2025 rate. Single-family authorizations fell 1.8% to 878k , while permits for buildings containing five units or more came in at 467k . The August data underscores the uneven pace of residential construction. Single-family starts rebounded after falling in July, while permits softened modestly. The pullback in multi-family starts was more pronounced, although that segment can be considerably more volatile from month to month. Housing completions also declined sharply in August, falling 11.9% to a seasonally adjusted annual rate of 1.128 million , down 27.1% from a year earlier. Single-family completions decreased 10.4% to 816k , while completions for buildings containing five units or more came in at 302k .

Builder sentiment took a meaningful step backward in September, with higher mortgage rates, rising construction costs and worsening labor shortages weighing on the market for newly built homes. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell three points to 32 , matching September 2025 as the lowest level in over 3 years.  Breakdown of various component indices: HMI Component August September Change Current sales conditions 39 35 -4 Sales expectations 43 37 -6 Prospective buyer traffic 23 23 Unchanged “Buyer traffic has weakened across much of the country, largely because of rising mortgage rates,” said NAHB Chairman Bill Owens. Owens also pointed to higher material costs, rising gas and diesel prices and persistent labor shortages as ongoing challenges for builders. NAHB Chief Economist Robert Dietz added that builders also reported difficulty finding available lots, with 42% rating current lot availability as poor and another 38% rating it as fair. Builders increased their use of pricing incentives in September. The share reporting price cuts rose to 38% from 35% in August, while the average price reduction remained at 6% for the sixth consecutive month. Sales incentives were also more common, with 66% of builders reporting their use, up from 63% in August and the highest share since December.

Mortgage application activity weakened again last week, with higher mortgage rates weighing on both purchase and refinance demand. The Mortgage Bankers Association (MBA) reported a 4.1% decrease in total application volume on a seasonally adjusted basis for the week ending September 11. The results include an adjustment for the Labor Day holiday. Purchase applications fell 1% from the previous week on a seasonally adjusted basis. The unadjusted Purchase Index dropped 13%, although that figure was heavily affected by the holiday. More notably, purchase activity was 19% lower than the same week one year ago, reversing the modest year-over-year gains seen in recent weeks. Refinancing continued to lose ground as well. The Refinance Index fell 9% from the previous week and was 65% below year-ago levels. Refinances accounted for just 39.4% of total application volume, down from 40.9% the previous week and marking another step lower as elevated rates eliminate much of the potential benefit for borrowers who might otherwise refinance. "Mortgage rates followed and were almost 7%," said Joel Kan, MBA's Vice President and Deputy Chief Economist, citing ongoing concerns over spiking energy prices, persistently high inflation, and future monetary policy. Kan noted that the 30-year fixed rate reached 6.97% , its highest level since May 2025, as the 10-year Treasury yield moved closer to 5%.

Existing-home sales slipped in August, falling below the 4 million annualized pace for the first time since June 2025, while a sharp increase in inventory gave buyers more options and pushed the supply of homes to its highest level in more than a decade. The National Association of REALTORS® reported a 2.0% decline in sales from July to a seasonally adjusted annual rate of 3.98 million , while sales were 1.2% lower than a year earlier. “Mortgage rates and home sales move in opposite directions, so it's not surprising to see a mild dip in home buying activity due to high mortgage rates,” said NAR Chief Economist Lawrence Yun. He noted that sales are still 1.6% higher year-to-date through the first eight months of the year, with wage growth and job creation helping to support demand despite elevated borrowing costs. Inventory provided a more encouraging development for buyers. Total housing inventory rose to 1.62 million units , up 3.2% from July and 5.9% from a year ago. It was the first time since November 2019 that inventory exceeded 1.6 million units. The increase in supply pushed the market to a 4.9-month supply , up from 4.6 months in both July and August 2025. Yun noted that the current level is the highest in more than ten years and should give buyers more room to negotiate. Despite higher inventory, home prices continued to climb, although the pace of appreciation remained modest. The median existing-home price increased to $429,100 , up 1.6% from August 2025 and marking the 38th consecutive month of year-over-year price increases.

Mortgage application activity pulled back last week, with a sharp decline in refinancing more than offsetting relatively stable purchase demand as mortgage rates moved higher. The Mortgage Bankers Association (MBA) reported a 2.7% decrease in total application volume on a seasonally adjusted basis for the week ending September 4. Purchase applications were little changed, slipping just 0.2% from the previous week on a seasonally adjusted basis. On an unadjusted basis, purchase activity fell 3%, but remained 4% higher than the same week one year ago, earning it's spot as the one positive note for this week's report. Refinancing was a different story. The Refinance Index fell 6% from the previous week and was 25% below year-ago levels, reaching its slowest weekly pace since May 2025. Refinances also accounted for a smaller portion of overall mortgage activity, with the refinance share falling to 40.9% from 41.8% the previous week. Notably, this data was collected before this week's sharpest rate spikes, so this trend will likely accelerate next week. "Mortgage rates moved higher last week, driven by ongoing investor concerns over inflation and the federal budget deficit," said Joel Kan, MBA's Vice President and Deputy Chief Economist. Kan noted that the 30-year fixed rate reached 6.85%, its highest level since June 2025 and 36 basis points above the same time last year.