Rising home prices hit the mortgage industry hard last week. Total mortgage application volume fell 3 percent from the previous week, and 17 percent from a year ago, according to the Mortgage Bankers Association's seasonally adjusted report.
The market has been especially tough on new homebuyers, with data showing a downward trend in purchase volume. Applications to purchase a home fell 2 percent for the week, and were also down 2 percent from a year ago.
Soaring prices are sapping mortgage demand. In June, home prices rose 6.8 percent from a year ago, according to a report from CoreLogic.
"Despite recent data indicating a strong U.S. economy and job market, including signs of wage growth, overall mortgage applications fell for the third straight week as housing continues to be hampered by the lack of homes for sale and crimped affordability," said Joel Kan, MBA vice president of economic and industry forecasting.
Mortgage applications to refinance a home loan have been falling, and they continued the downward trend, dipping 5 percent from the previous week to the lowest point since December 2000. That's down 35 percent year over year.
The refinance share of mortgage activity also decreased to 36.6 percent of total applications from 37.1 percent the previous week. The adjustable-rate mortgage share of activity decreased to 6.3 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.84 percent, with points remaining unchanged at 0.45 for loans with a 20 percent down payment.
The overall view for mortgage applications looked bleak.
"The Market Index, which measures both purchase and refinance applications, was decreased to its lowest level since January 2016. Both purchase and refinance indexes decreased as well this week, with the refinance index staying close to its lowest level since December 2000," Kan said.