Who could have seen this coming?
Despite near record high confidence among homebuilders and realtors (whose salaries depend on it), it would appear that it is collapsing homebuyer confidence that really matters after all...
Howe do we know? Well aside from home sales tumbling, we are now seeing mortgage applications slumping to pre-COVID lows...
Overall mortgage applications dropped 6.9% WoW - the biggest drop in almost 5 months
This reflected an 8.2% decrease in applications for refinancing existing loans and a 4.8% drop in applications to purchase a home.
“Purchase applications for conventional loans declined last week to the lowest level since last May,” Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said in a statement.
“The average loan size for total purchase applications increased, indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale.”
With both new and existing home sales having fallen sharply this year (due, according to NAR, to a shortage of houses on the market) and mortgage rates rising (anticipating a Fed taper), perhaps - once again - the rational exuberance of home-builders and home-brokers should be more measured.