Despite the 30-year mortgage rate falling to a seven-week low, the number of residential property applications tumbled for the first time in a month.
Applications to purchase a home fell by 4 percent from last week, while applications to refinance a mortgage slipped by 5 percent.
The 30-year mortgage rate eased to 6.4 percent, down by 6.45 percent from the previous week, a trend supported by the decline in Treasury yields. This also represented the fourth consecutive weekly slide in mortgage rates.
“Spring has arrived, but the housing market is missing the customary burst in listings and purchase activity that typically mark the season,” Mike Fratantoni, MBA’s chief economist and senior vice president of research and industry technology, said in a statement.
Overall, borrowing costs remain elevated, and housing supplies remain low, weighing on national sales activity.
The latest trends could be signaling tighter credit conditions, Fratantoni said.
“While we have seen relative weakness at the high end of the housing market in recent months, the divergence in rates suggests that banks may be tightening credit in response to recent challenges, preserving balance sheet capacity as deposit balances have declined,” he said.
The failures of Silicon Valley Bank and Signature Bank have resulted in economic and financial stresses that could affect the commercial and residential real estate markets, says James Knightley, the chief international economist at ING.
Most of the roughly 4,200 U.S. banks are classified as small (less than $250 billion in assets) but account for about 43 percent of national commercial bank lending.
Home Prices in 2023So where does this leave national home prices?
In February, monthly home prices increased for the first time in eight months, according to Black Knight data. The adjusted home price index edged up by 0.16 percent, the best monthly performance since May, as prices expanded in 78 percent of the 50 largest U.S. markets.
Prior to the banking crisis, economists’ forecasts for the real estate market were mixed.
Nik Shah, the founder and CEO of Home LLC, penciled in a 4 percent year-over-year home price growth for 2023, citing tight supplies, the Federal Reserve cutting interest rates, and low foreclosure risk.
Federal Reserve Bank of Dallas economists are concerned that a retreat in the U.S. housing market could extend to other advanced economies.
The regional central bank economists warned of a 19.5 percent housing market correction.