Rising mortgage rates are having an impact on the housing industry as several areas of the industry are seeing declines.
Interest in mortgage applications is one metric being affected. Demand slipped 1.2% from the previous week, according to the weekly survey from the Mortgage Banker's Association.
Refinancing also took a hit. That index decreased 4% from the previous week and was 75% lower than the same week one year ago.
"The 30-year fixed rate declined for the second straight week to 5.46% but remains well above what borrowers were used to over the past two years," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "Most refinance borrowers continue to remain on the sidelines as a result, and refinance applications have fallen in nine of the past 10 weeks."
One area that bucked the trend was the Purchase Index, which increased 0.2% from one week earlier.
That follows a home sales decline in April. Sales of new single-family houses in the U.S. dropped significantly more than expected last month to the lowest level in two years as rising construction costs, home prices, interest rates and supply chain woes continue to batter the industry.
The U.S. Census Bureau's latest data shows the pace of new home sales fell by 16.6% in April from the month before at a seasonally adjusted rate of 591,000. Analysts surveyed by Refinitiv anticipated a dip of 1.7%.
"Higher mortgage rates are also impacting purchase market conditions, as the purchase index remained close to lows last seen in the spring of 2020 when a significant portion of activity was put on hold due to the onset of the pandemic," added Kan.
The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.