May 26 (UPI) -- A small increase in the fixed U.S. mortgage rate has contributed to a 7% decline in refinancing applications, the Mortgage Bankers Association said Wednesday.
The average rate for a 30-year fixed loan inched up 0.03 points to 3.18% last week, the MBA said. Overall applications tumbled 4.2% and refinancing applications were down 9% year-to-year.
Refinancings made up 61.4% of the total market last week.
"While purchase activity was around 4% lower than a year ago, the comparison is to last spring's large upswing in activity as pandemic-related lockdowns lifted," MBA economist Joel Kan said in a statement.
"Demand is robust throughout the country, but homebuyers continue to be held back by the lack of homes for sale and rapidly increasing home prices."
Despite increasing home prices, some industry leaders say the market is strong for homebuilders.
Toll Brothers Chairman and CEO Douglas Yearley said his company is benefiting from the current market, in which housing stocks are low and demand is steady.
"With strong demand and constrained industry-wide supply, we have continued to raise prices in excess of cost increases while setting all-time records for contracts and backlog in both units and dollars and exceeding our guidance on nearly every metric," Yearley said in a statement.
