A lot of factors at play
Fast-growing real estate prices are putting pressure on buyers right now and putting home affordability into question. Despite low mortgage rates, homes are appreciating at record levels, with the national average appreciation rate reaching 15% to date. Homebuyers who may have saved 5% to 20% in interest may not be able to pull together the extra cash needed for the increased home prices, meaning they are having to wait to buy.
Summer is usually one of the best times for home sales. Warmer weather makes it easier in some climates to house hunt and navigate moving. But after an unusually dull summer in 2020, a period of time when most states were still very much locked down, people are now anxious to get outside and enjoy the summer.
That means seasonality looks different this year, and personally I feel that's being reflected in the number of new mortgage applications, especially over the Fourth of July weekend. I wouldn't be surprised to see the number return closer to the previous week's average after the holiday weekend, but it could very well stay flat or continue to decrease as people prioritize enjoying the summer over moving.
Buying may slow, but it's long from over
While there may be short-term interruptions in the buying frenzy, it's likely that the shopping craze will continue for the near future. People will always need a home to live in, and despite rapidly appreciating home values, low interest rates still mean many buyers can afford more.
There may be a bit of sitting on the sidelines, but some who relocated because of work over the past year may find themselves having to return as offices start to reopen. Others may discover that their temporary remote work is becoming permanent and choose to migrate to a new area. Either way, people will continue to buy and sell real estate. Mortgage applications and refinancing likely will return, especially while rates are so low. It just may not be at the fast pace we saw over the past year.