A slight increase in the number of homes for sale may be helping to juice the mortgage market.
After falling for two straight weeks, mortgage application volume rose 2.5 percent last week, seasonally adjusted, compared to the previous week. The increase was driven entirely by purchase applications.
Still, total volume is 4.3 percent lower than a year ago, according to the Mortgage Bankers Association, due to continuing weakness in loan refinancing.
Mortgage applications to purchase a home jumped 7 percent for the week and were 8 percent higher than the same week one year ago. Potential home buyers have been blocked by a severe shortage of homes for sale this year, but more listings have been coming on the market. While total supply is still lower than a year ago, this is, perhaps, the first sign that the supply crisis may be beginning to ease.
“Even though inventories continue to decline, they are doing so at a slower pace. In other words, while buyers continue to see fewer homes available for sale, the decline was smaller than we’ve seen in previous months,” said Danielle Hale, chief economist for Realtor.com. “Before we see inventories increase, we need to see them slow, and the data has shown four months of deceleration (smaller year over year declines).”
There is still, however, far more demand than supply, and if the economy continues to improve, that demand will grow.
“The strong job market continues to bolster demand for homes,” said Mike Fratantoni, chief economist for the MBA.