Mortgage application volume declined 2% last week even as average rates held steady at 7.02%, underscoring persistent weakness in housing market demand.
Refinance activity was hit hardest, falling 7% week-over-week. Despite that drop, refinance applications remain about 5% higher than a year ago. The decline in refinances, even with unchanged rates, reflects the drag from rates that are about 24 basis points higher than a year earlier and the limited incentive for many homeowners to refinance.
Purchase applications dipped slightly, down 0.4% week-over-week, and sit roughly 7% below last year’s levels. Still, there are encouraging signs in specific segments: FHA purchase loan volume rose by 2%, and both new and existing home sales finished the year on relatively strong footing, suggesting buyer activity may be shifting rather than disappearing outright.
Mortgage industry analysts, including MBA economist Joel Kan, note that conditions could improve if interest rates stabilize and housing inventory expands. Those factors would help affordability and give buyers more options. At the same time, the upcoming Federal Reserve meeting is not widely expected to produce changes large enough to materially alter the near-term market outlook.
Overall, the data point to a housing market that remains constrained by higher borrowing costs, but pockets of resilience persist. Continued monitoring of rate movements, inventory trends, and segment-level demand will be important to see whether the modest weakness in applications becomes a longer-term pattern or a temporary lull ahead of a gradual recovery.