April 19 (UPI) -- Higher lending rates are catching up with the housing market, with the Mortgage Bankers Association saying Wednesday that applications for a loan for a new home declined from week-ago levels.
The MBA reported the rate on a 30-year, fixed-rate mortgage increased by 13 basis points to 6.43%, leading to a 10% decline in mortgage loan applications.
"Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act," Joel Kan, the deputy chief economist at the MBA, said.
Kan added the refinance activity represented 25% of all applications during the week ending April 14, a decline from previous weeks as interest rates remain elevated.
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Housing is headed for a downturn following successive rate hikes from the U.S. central bank. Policymakers at the Federal Reserve are widely expected to announce another rate hike in May as inflation, at around 5% on an annual basis, is above the 2% target rate.
"With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes," Kan said.
Higher lending rates make big-ticket items more expensive. Shelter, meanwhile, represents a large component of consumer-level inflation and is elevated month-on-month to March.
On construction, the rate of housing starts for single-family homes was 861,000, a 2.7% increase from the revised figure for February of 838,000. There were 1.05 million single-family homes completed last month, a 2.4% increase from February.
The March start rate for homes with five or more units, however, was 542,000, down from 620,000 in February. Building permits also declined by 8.8% falling to an annual rate of 1,413,000 from 1,550,000 in February.
