The US housing market leads the way, but "rate cuts" still fail to boost demand? Last week, home purchase applications hit a new low in 2 months

The index measuring new mortgage applications for home purchases in the United States fell to the lowest level since February this year last week, indicating that although the decline in mortgage rates has boosted demand, it is not enough to offset the impact of rising house prices on the demand side. According to data released by the Mortgage Bankers Association (MBA) on Wednesday for the week ending August 16th: The index for new mortgage applications for home purchases fell by 5.2% to 130.6. Refinancing applications also declined. In the previous week, refinancing activity surged, reaching the largest single-week increase since the early days of the 2020 COVID-19 pandemic, with this part of loan applications soaring to a two-year high. According to the latest data from the MBA, the contract interest rate for 30-year fixed-rate mortgages once again decreased by 4 basis points to 6.5%, the lowest level since May last year; the contract interest rate for 15-year fixed-rate mortgages slightly increased; and the interest rate for 5-year adjustable-rate mortgages recorded the largest increase since the beginning of this year. The decline in mortgage rates in the United States broadly follows the downward trend in U.S. Treasury yields. With expectations that the Federal Reserve will begin cutting interest rates next month, the yield on the 10-year U.S. Treasury bond has recently decreased. Despite more favorable mortgage rates under the prospect of looser monetary policy by the Federal Reserve, high house prices have pushed down the affordability of housing in the United States to the lowest level in decades. Due to high levels of new home inventory, the pace of new home construction in the United States has dropped to the lowest level since May 2020. MBA's related survey has been conducted weekly since 1990, based on responses from mortgage bankers, commercial banks, and savings institutions. The data covers over 75% of retail residential mortgage applications in the United States