Applications for home mortgages dropped again last week to a fresh 22-year low as more would-be buyers balk at sky-high home prices and elevated interest rates continue to batter the refinancing market.
The Mortgage Bankers Association reported Wednesday that its Weekly Mortgage Applications Survey ending Aug. 19 showed a 1.2% seasonally-adjusted decline from the week before, with both purchase and refinancing applications sliding.
The purchase index dropped 2% from the previous week and was down 21% from a year ago, and refinances fell 3% over the week — down a whopping 83% from the same period in 2021.
"Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity," said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
Kan noted, "Mortgage rates increased for all loan types last week, with the benchmark 30-year fixed-rate jumping 20 basis points to 5.65% — the highest in nearly a month."
The decline in home buying activity is the latest indication that the interest rate-sensitive housing market continues to cool as the Federal Reserve hikes rates to combat soaring inflation.
The National Association of Realtors reported Wednesday that its pending home sales index fell 1% last month from June and was down 19.9% from July last year. The number of signed contracts to buy previously owned homes is now at the lowest level in two years.
Meanwhile, new home sales tumbled for the sixth straight month in July to the lowest level since 2016, with the median price of a new home jumping 9% from the month before to $439,400.
The steep prices are causing more would-be buyers to back out of purchase contracts.
Redfin reported last week that the number of home sale cancellations hit a two-year high of 63,000 in July, equal to 16% of the homes that went under contract that month.
FOX Business' Megan Henney contributed to this report.