Mortgage applications in the United States have declined for the third consecutive week, reflecting ongoing challenges in the housing market. According to the Mortgage Bankers Association (MBA), total mortgage application volume decreased by 3.9% for the week ending May 30, 2025, compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased slightly to 6.92% from 6.98%. Despite this modest dip, mortgage rates have remained within a narrow range between 6.8% and 7% since April.
Refinance activity, which is particularly sensitive to interest rate changes, fell by 4% during the same period. However, it remains 42% higher than the same week one year ago.
Applications to purchase homes also declined by 4% week-over-week but were up 18% compared to the same period last year. The increase in purchase applications year-over-year is attributed to greater housing supply, with inventory levels now at their highest in five years.
Despite the increased inventory, sales activity has not met expectations. Pending home sales dropped 6.3% in April, the largest decline since 2022, reflecting buyer hesitation amid economic uncertainty.
The Federal Reserve’s policies and shifting bond market yields, particularly the 10-year Treasury yield, have influenced mortgage rates. As of late May, the average rate for a 30-year mortgage in the U.S. rose to 6.89%, its highest level since early February.
Economists suggest that mortgage rates will fluctuate between 6% and 7% throughout 2025, with lower rates necessary to reinvigorate buyer interest.
In summary, while there is an increase in housing inventory and a year-over-year rise in purchase applications, the U.S. housing market continues to face challenges due to high mortgage rates and economic uncertainty.
