NEW YORK – Applications for U.S. home loans fell 6.3 percent last week after a brief bounce in early August spurred by a drop in mortgage rates, the Mortgage Bankers Association (search) said Wednesday.
The MBA said its market index, a gauge of mortgage activity, fell to a seasonally adjusted 646.3 in the week to Aug. 20 from 689.4 the week before.
Demand for loans will likely drift lower unless rates fall again, said Douglas Duncan, the group's chief economist.
The Washington-based trade group's purchase index, a gauge of requests for loans to buy homes, fell 5 percent to 443.7 from 467.1 the prior week but was still well above its year-ago level of 375.5.
U.S. home sales have cooled from earlier blistering levels, given the upward trend in mortgage rates since late March.
Previously-owned homes sold at an annualized rate of 6.71 million units in July, below a downwardly revised 6.92 million annualized pace in June. The July reading was below analysts' median forecast of 6.81 million, said the National Association of Realtors (search), an industry trade group, Tuesday.
The Commerce Department (search) said Wednesday new U.S. home sales fell by 6.4 percent to an annualized 1.134 million units in July from June's downwardly revised 1.211 million.
Analysts had expected July new home sales to come in at a rate of 1.290 million units.
The MBA's seasonally adjusted loan refinancing index fell 8 percent last week to 1,824.9 from the previous week's 1,982.7.
The MBA's Duncan estimated that the rate on 30-year mortgages, which are held by three-quarters of U.S. homeowners, would have to fall below 5.5 percent to kick up a large wave of refinancing.
Thirty-year mortgage rates, excluding fees, averaged 5.78 percent, up 0.03 percentage point from the previous week but down 0.44 percentage point from a year ago.
However, interest rates on 15-year fixed-rate mortgages fell 0.02 percentage point last week to 5.13 percent, while adjustable-rate mortgages, which have grown in popularity, fell between 0.01 and 0.06 percentage point from the previous week.
Duncan, asked about Hurricane Charley (search), said the bad weather may have had "a dampening effect" in the U.S. Southeast.
On Aug. 13, Charley hit the southwest coast of Florida, causing more than $7.4 billion in insured damage, according to estimates by the Insurance Information Institute. Florida is one of the United States' more booming housing markets.