US mortgage applications steady

Rising demand for loans to buy homes offset a drop in applications to refinance existing mortgages, leaving US mortgage applications little changed from the prior week, an industry group said on Thursday.
The Mortgage Bankers Association said its mortgage applications index rose 0.1 percent to a seasonally adjusted 619.4 in the week ended June 29, nearing its lowest level since mid-February. The MBA's purchase index rose 2.0 percent to 437.3. But the refinancing applications gauge dropped 2.6 percent to this year's low of 1,687.2 on a seasonally adjusted basis.
"We've got a huge amount of inventory to work through, particularly of existing homes. but it looks like demand is holding up here," said David Kelly, economic advisor at Putnam Investments in Boston.
The MBA's purchase index has been steadily rising, based on a four-week moving average, to its highest levels since January 2006, he said. New home sales and housing starts looked stronger in the second quarter than in the first, he added.
Many economists doubt US housing will emerge from its slump before next year, predicting further price cuts to lure buyers to the huge supply of unsold homes.
Pending sales of existing homes sank to their lowest level in more than 5-1/2 years in May, the National Association of Realtors said last week. Tighter lending practices and a lack of buyer confidence stifled demand, the group said. There are almost 5 million new and existing homes on the market, and "that's got to be very depressing for a Realtor," said Kelly.
Home builders have sharply cut back on new construction, alleviating some pressure on the housing sector. "I think it's going to be a soggy housing market for a long time, but from an economic perspective the heavy anchor of a plunging home building sector is about to be set loose here," he said.
On a four-week moving average, which smooths volatility, the overall applications index is down 0.2 percent at 637.1, the purchase index is up 0.2 percent at 445.4 and the refinancing index is down 1.0 percent at 1,762.6.
Refinancing represented 37.8 percent of all applications in the latest week, down from 38.7 percent in the prior week. The average 30-year fixed-rate mortgage, excluding fees, fell 0.10 percentage point to 6.50 percent, the trade group said. Still, the rate is among the highest of the year, having fallen to about 6 percent in March. Rates last week also fell on shorter-term loans, with the average 15-year mortgage down 0.04 percentage point to 6.20 percent and the one-year adjustable-rate mortgage down 0.02 percentage point to 5.49 percent.