Welcome back to the CMRE blog, where we cut through the noise to bring you the clearest insights into today's mortgage and real estate market. The past few weeks have shown a mixed bag of activity, with mortgage rates continuing their upward climb, impacting borrower behavior, and the new home market experiencing a slight slowdown. Let's dive into the latest data.
Mortgage Applications: A Modest Pulse Amidst Rising Rates
After a period of softening, mortgage application activity saw a modest rebound for the week ending August 28th. Total application volume, seasonally adjusted, increased by 0.8%. This uptick was primarily driven by a 2.0% rise in purchase applications, signaling that committed buyers are still navigating the market. However, refinance demand continued its downward trajectory, falling another 1.0% and sitting 19% below year-ago levels.
"Mortgage rates reached their highest levels in four weeks as investors’ concerns about inflation and growing deficits push yields higher across the globe," noted Mike Fratantoni, MBA’s SVP and Chief Economist. This environment is clearly shifting borrower preferences. The share of adjustable-rate mortgages (ARMs) climbed to 8.0% of all applications, its highest level in five weeks, with the average rate for a 5/1 ARM falling to 5.94%. This suggests some borrowers are seeking alternatives to mitigate the impact of higher fixed rates.
New Home Sales Hit a Speed Bump
While existing home inventory remains tight, the new home market, which has been a strong driver of sales, experienced a setback in July. Sales of new single-family homes fell by a significant 10.5% from June's revised figures, landing at a seasonally adjusted annual rate of 607,000. This decline largely erased June's gains, indicating that affordability constraints and elevated mortgage rates are still formidable challenges for prospective buyers. Year-over-year, new home sales were down 6.3%.
Builders, meanwhile, continue to add to the housing supply. The number of new houses for sale rose to 488,000 in July, an increase of 1.9% from June. With sales slowing and inventory growing, the implied supply surged to 9.6 months, up from 8.5 months in June. This increase in supply could offer some breathing room for buyers in the coming months, though it's still below a balanced market.
Pricing signals were mixed. The median sales price for new homes slipped to $393,800 in July, a 2.3% drop from June and 0.9% lower than a year ago. Conversely, the average sales price climbed to $508,800, up 4.1% from June and 5.4% from July 2025. This disparity often reflects changes in the mix of homes sold, with more higher-priced properties potentially moving off the market.
What This Means for You
The current landscape underscores a market adjusting to persistent higher rates. While purchase demand shows resilience, the appeal of ARMs is growing as buyers look for ways to manage costs. The new home market's pause in July highlights the ongoing affordability challenges. For buyers, increased new home inventory could present more options, but vigilance on interest rate movements remains key. For sellers, pricing strategically and understanding local market nuances is more important than ever.
Stay tuned to CMRE for more updates as we continue to track these evolving trends. If you're considering a move or a refinance, connecting with a CMRE expert can help you navigate these dynamic conditions effectively.