The numbers: Mortgage applications ticked up 0.9% amid a slow holiday period this December.
With mortgage rates falling to 6.34%, the lowest level the 30-year mortgage has been at since September, buyers are slowly returning to the market.
The month of December is particularly slow for home buying, which weighed on the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (MBA) said on Wednesday.
The market index rose 0.9% to 212.5 for the week ending December 16. A year ago, the index stood at 588.4.
Key details: The refinance index jumped 6%, but was still down 85% compared to a year ago.
The purchase index — which measures mortgage applications for the purchase of a home — fell by 0.1% from the previous week.
The average contract rate for the 30-year mortgage for homes sold for $647,200 or less was 6.34% for the week ending December 16.
That’s down from 6.42% the week before, the MBA said.
For homes sold for over $647,200, the average rate for the 30-year was 5.97%.
The 15-year fell to 5.81%.
The rate for adjustable-rate mortgages dropped to 5.43%.
The big picture: Mortgage rates are coming down — and will continue to trend downwards, so expect buyers to come back.
But the housing market data is also showing signs that there’s still a long way to go.
MBA’s SVP and chief economist Mike Frantantoni noted that in response to low levels of buyer traffic, home builders are pulling back on new construction.
The MBA expects mortgage rates to continue to go down, however, and hence forecasts that more buyers will return to the market later in 2023.
Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.671% dropped below 3.7% in early morning trading.