Even refinances, which are highly rate-sensitive, were unimpressed by the continued low rates, falling 4 percent from the previous week, seasonally adjusted. They are, however, nearly 48 percent higher compared to the same week one year ago, when interest rates were higher.
"Refinance volume continues to tail off as markets recover post Brexit," said Michael Fratantoni, chief economist for the MBA.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.64 percent from 3.65 percent, with points decreasing to 0.31 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio loans.
Mortgage applications to purchase a home also lost ground, falling 4 percent for the week to the lowest level since February. Still, they are 10 percent higher than the same week last year.
"A strong job market and low rates continue to support home sales," Fratantoni said.
Low rates are the only bright spot in a housing market plagued by low inventory and rising prices. Several major U.S. metropolitan markets are hitting new record high median home prices, and homebuilders are not starting enough new homes to meet demand and help moderate the price gains. Single family housing starts in July rose less than 1 percent for the month, and building permits, an indicator of future construction, fell 3.7 percent, according to the U.S. Census.