According to the Mortgage Bankers Association, the average purchase loan size fell to $415,000 for the week ending July 8, down from $460,000 hit in March.
Total mortgage application volume fell 1.7% on a seasonally adjusted basis last week compared to the previous week. The week's results included an adjustment for the observance of Independence Day.
On a seasonally adjusted basis, mortgage applications to purchase a home fell 4% compared to the previous week. On an unadjusted basis, purchase applications fell 14% compared to the previous week and 18% compared to the same week a year ago.
"Purchase applications for both conventional and government loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook," MBA associate vice president of economic and industry forecasting Joel Kan said in a statement.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) remained at 5.74%. Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased to 5.25% from 5.28%.
Applications to refinance a home loan rose 2% compared to the previous week but was 80% lower than the same week a year ago. The refinance share of mortgage activity increased to 30.8% of total applications from 29.6% the previous week.
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The latest mortgage application data comes as consumers continue to feel the pain from inflation.
On Wednesday, the Labor Department reported that the consumer price index - a broad measure of the price for everyday goods, including gasoline, groceries and rents - soared 9.1% in June from a year ago, the fastest pace of inflation since December 1981. Prices jumped 1.3% in the one-month period from May.
Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists.
In June, the Federal Reserve raised its benchmark interest rate by 75-basis points for the first time in nearly three decades in an effort to tame scorching-hot inflation. Policymakers have confirmed that a similarly sized increase is on the table in July.