Despite a drop in the average 30-year mortgage rate to a 4-month low, the seasonally adjusted volume of applications to secure a purchase mortgage loan for a home in the U.S. dropped 10 percent last week, pushing the year-over-year decline in purchase activity back over 40 percent, according to data from the Mortgage Bankers Association.

Closer to home, pending home sales in San Francisco, which we first reported had dropped over 40 percent on a year-over-year basis over a quarter ago, are still down over 40 percent on a year-over-year basis despite a seasonal uptick in activity from a six-year low in the absolute.

9 thoughts on “Purchase Mortgage Activity Drops Despite Decline in Rates”
  1. I’m beginning to expect a soft landing as well. Check out the latest IMF World Economic Update and whatever other research you prefer. Global GDP if forecast to grow at a faster pace next year and inflation is expected to decrease meaningfully. And the Fed is expected to cut rates next year. So on a macro level the worst may be behind us already.

    Big wildcard is Ukraine.

    1. Ukraine is already shuffled into the deck; a wildcard would be Taiwan or South Korea or….somewere we’re not even thinking about… ‘cuz that’s what makes a wildcard wild.

      1. Huh, you must be missing the NATO calls to shift to wartime economy … plenty of wildcards.

        Also, soft landing for whom?

        1. A ‘soft landing’ for Americans who work for a living and whose wages don’t keep up with the yearly 6.5 percent increase in the CPI.

          I’m pretty sure the ‘soft landing’ metaphor was introduced into our macroeconomic lexicon by Former Federal Reserve chair Ben Bernanke before the so-called GFC (and we know how that turned out in the long run), but today we’re talking about a scenario where The Fed brings inflation back to near the 2 percent target without a large increase in the unemployment rate while they do so.

  2. In local(ish) news, Meta is now up 100% from its late October lows. Big earnings beat and beat back an FTC challenge today. A lot of things have changed significantly for the better over the last 3-4 months, from inflation to interest rate expectations to stock prices inc. tech. The spate of negative macro trends that smacked us late last spring and continued to the end of the year have pretty much all reversed.

    1. As of today, it looks like the seventy-to-eighty basis points of cuts that the fed funds futures market was pricing in for later in 2023 has almost completely disappeared. Like I said last month, the market hadn’t yet started internalizing the obvious guidance from The Fed, but they are on their way now.

      Last month at about this date, the year end rate was projected to be about 4.3 percent and now it’s over 5 percent. The bond market is coming around to recognizing, after today’s the hotter-than-expected CPI report, the terminal rate is going to be held higher, for longer, with a predictable rise in rates for mortgages.

  3. The hostage taking of the debt limit raise will surely create some market chaos if we head into May with no compromise.

  4. UPDATE: The seasonally adjusted volume of applications to secure a purchase mortgage loan ticked up 3 percent over the past week but was down 37 percent on a year-over-year basis.

    At the same time, average mortgage rates have started to tick back up with the probability of (at least) another two rate rate hikes within the next quarter, on top of one last month, having jumped to 75 percent, none of which should catch any plugged-in readers, other than the most obstinate, by surprise.

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