June 18 (UPI) -- The Mortgage Bankers Association reported that May mortgage demand was down 4.5% year-over-year, despite lower interest rates. Refinance demand was also lower in May.
"Economic uncertainty, rising mortgage rates and increasing competition from growing existing-home sales inventory likely dampened overall demand for new-home purchases in May," association vice president and chief deputy economist Joel Kan said in a statement.
"Applications to purchase newly built homes fell to their slowest pace in three months as buyers held off on their purchase decisions," he added. Mortgage applications were down 9% compared with April.
According to the mortgage bankers' group, new single-family home sales dropped 12.1% from April's sales level. The association estimated that 631,000 new homes sold in May, compared with 718,000 in April.
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Kan said applications to buy newly built homes fell to the lowest level in three months.
The average mortgage loan for new homes was $379,209 in May. In April it was $376,992.
Mortgage loan application volume for the week ending June 13 was down 2.6% from a week earlier, according to the association.
That is despite interest rates dropping to 6.84% for a 30-year fixed loan, the lowest level since April.
Mortgage News Daily CEO Matthew Graham wrote in a statement that what the Federal Reserve does next could cause the mortgage market to react.
"This has nothing to do with 'cut vs no cut' (there is zero chance of a rate cut) and everything to do with the other information the Fed presents on announcement days," Graham wrote. "Of this info, it is the dot plot that carries the most weight."
The dot chart is the Fed's rate outlook over several years.
