• Purchase applications saw their fourteenth straight week of year-over-year gains
  • The housing market is currently an engine of growth for the economy.
  • Prices are rising due to limited supply, rising demand

Mortgage applications to buy a home inched up 0.4% last week from the prior week, but have spiked by 33% over the past year, suggesting a robust appetite for housing, the Mortgage Bankers Association (MBA) said.

Purchase applications saw their 14th straight week of year-over-year gains

“The home purchase market remains a bright spot for the overall economy,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA.

Greg McBride, chief financial analyst at, told International Business Times that mortgage applications for home purchases have surged relative to year-ago levels for a few reasons.

“Record low mortgage rates, pent up demand after the quarantine postponed the typical spring buying season into summer, and buyers relocating due to lifestyle concerns or to something more suitable to work from home,” he said. “The housing market is currently an engine of growth for the economy. In addition to low mortgage rates and pent-up demand, the historically low supply of homes available for sale is pushing prices higher.”

However, other parts of the mortgage industry were more muddled.

"Mortgage rates were mixed last week, but the rates for 30-year fixed mortgages and 15-year fixed mortgages declined,” Kan added. “Despite the lower rates, conventional refinance applications fell 11% and government refinance applications fell 6%, which pushed the total refinance index to its lowest weekly level since July."

The MBA further said that the refinance share of mortgage activity fell to 62.6% of total applications from 64.6% in the prior week.

Redfin, a real estate brokerage, reported on Tuesday that for the week ended Aug. 16 its Homebuyer Demand Index had climbed 29% from pre-pandemic levels in January and February. Moreover, the median price of homes that sold during the four-week period ended Aug. 16 was up 11% year-over-year -- the largest such increase in more than six years – to a new record high of $316,375.

Redfin attributed the higher prices primarily to “a lack of homes for sale in the face of an onslaught of homebuyer demand.”

Indeed, the number of homes actively listed for sale was down 28% from a year ago.

"Some of the homebuyers I've worked with have come into the process thinking that thanks to low interest rates and the pandemic they'll be able to get a deal," Rhode Island Redfin agent Lisa Bernardeau said. "Unfortunately I have to burst their bubble and explain that it's actually the opposite -- home prices are up 10% to 20% from last year, depending on the neighborhood."