Mortgage applications in the U.S. rose for the fourth consecutive week as home purchases and refinancing gained.
The Mortgage Bankers Association’s index of loan applications climbed 1.1 percent in the week ended May 20. The group’s purchase index was up 1.5 percent and a measure of refinancing increased 0.9 percent.
The data are consistent with a government report yesterday that showed purchases of new houses rose in April for a second month, helped by job creation and borrowing costs close to a six-month low. At the same time, the excess supply of unsold homes and foreclosure-driven price declines are preventing a sustained rebound in housing.
“There is still a long way to go before the sector becomes normal or healthy,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Demand will remain constrained by high unemployment, constrained credit conditions and fears of further price falls.”
The average rate on a 30-year fixed loan increased last week to 4.69 percent from the prior week’s 4.60 percent that was the lowest since the end of November, today’s report showed. Borrowing costs reached 4.21 percent in October, the lowest since the group’s records began in 1990.
The average rate on a 15-year fixed mortgage rose to 3.78 percent from 3.75 percent.
The share of applicants seeking to refinance a loan was 66.8 percent last week, little changed from 66.7 percent.
New-home sales climbed 7.3 percent to a 323,000 annual pace last month, figures from the Commerce Department showed yesterday. New houses sold at a 278,000 rate in February, matching the pace in August as the lowest in data going back to 1963.
As distressed transactions have played a bigger role, new-home sales have shrunk as a share of total sales, accounting for about 6 percent of the market in April, down from 16 percent at their peak in July 2005.
Purchases of previously owned homes dropped 0.8 percent to a 5.05 million annual rate in April, data from the National Association of Realtors showed May 19. All-cash deals accounted for 31 percent of transactions, and distressed properties, including foreclosures and short sales made up 37 percent.
Builders remain concerned. Douglas Yearley Jr., chief executive officer at Toll Brothers Inc., the largest U.S. luxury-home builder, earlier this month said the spring home-selling season has been “disappointing” and that “people are still scared.”