The latest from the Mortgage Bankers Association’s weekly survey shows mortgage applications are down 4 percent (as of the week of July 21). The MBA monthly survey also describes a 3 percent decrease in mortgage applications in June 2021 from May 2021, and a decrease of 23.8 percent from the same time last year. Signs are pointing to a slowing down in the housing market which is unusual for this time of year, so let’s look at the variables and try to understand why this could be happening…

It’s important to note – we’ve been watching as the steep rise in sale prices has started to slow; yes, prices continue to rise but at a much slower pace. Check out these interactive charts by Redfin to see how prices and sales, among other details, have gradually been changing in recent months.

Could the housing market swing in favor of buyers?

Furthermore, this is one of many discussing how competition amongst buyers may be nearing its peak as many become frustrated with the spiking home prices. This frustration may soon be visible to sellers, who are anticipated to realize waiting much longer for prices to continue their upward climb may not be wise, meaning an increase in market inventory.

HousingWire also cites a fantastic 56 percent of homes sold above their list price in 2021, up from the 27 percent seen in 2020, at an average of 2.6 percent above asking price per home. CNN estimates home prices to be overvalued by 10 to 15 percent. Couple this with an influx of cash buyers that are snatching up homes as soon as they come to market and a decline in new building permits (check out this census.gov press release), the pressure buyers are under is only getting worse. This imbalance can’t go on forever, the only questions now are when will the market shift occur, and how hard will it swing in favor of buyers?

Is a drop in home sales on the horizon?

MarketWatch makes the excellent point that sales lag behind mortgage applications, stating the mortgages applications, which declined between December and April, are now visible in national sales numbers. MarketWatch is estimating the current decline in mortgage applications could yield a year-over-year decline in Q4 this year.

As real estate and lending professionals, it’s vital to be among the first to have access to mission critical data to stay on top of market trends and offer informed advice for your clientele. To do that, data solutions like our Mortgage MarketShare Module, Loan Originator Module, and other invaluable market intelligence, are vital tools you’ll want readily available.

Reach out to a data specialist and we’ll help you find the perfect fit for your team.