US mortgage applications for home purchases fell to their lowest mark in 28 years, Mortgage Bankers Association data showed.
Refinancing also declined to a level 35% lower than the same week last year.
Mortgage rates climbed to 7.31% in the week ending August 18, the highest in 23 years.
Americans haven't been this reluctant to enter the housing market in decades. Wednesday data from the Mortgage Bankers Association showed that mortgage applications for homes fell for the sixth straight week to hit the lowest level since 1995.
Total applications dipped 4.2% from the week earlier leading up to August 18, according to the property group. Meanwhile, the report also showed that the typical 30-year fixed mortgage rate climbed to 7.31%, the highest since 2000.
At the same time, the MBA's Refinance Index decreased 6% from the prior week, and was 35% lower from the same time in 2022.
"[H]omebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power," Joel Kan, MBA's vice president and deputy chief economist said in a statement. "Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing."
The MBA's survey covers 75% of all US retail residential mortgage applications, and it's been conducted every week for over three decades.
Today's housing market is even more unaffordable than it was at the peak leading up to the 2008 financial crisis. The Atlanta Fed's Home Ownership Affordability Monitor fell to 69.5 in June from 70.5 in May.
In July 2006, the gauge troughed at 71.5.
A separate data release on Tuesday from the National Association of Realtors showed existing home sales decreased 2.2% in July, falling to the lowest level since the start of 2023. While those two percentage points may sound insignificant, the year-over-year figure shows a 16.6% dip. Combine that with a 14.6% annual drop in housing inventory and the result is a historically unaffordable and tight market.
Goldman Sachs strategists had previously expected home prices to slide 2.2% in 2023, but this month they revised their outlook higher. They now expect a 1.8% jump.
"New listings are being added at the lowest pace on record," the bank's strategists said, "driving positive net absorption even amid paltry purchase application volume."
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