Mortgage Application Activity Drops as Home Prices Rise

Mortgage application activity fell for the second consecutive week as home prices were on the rise.

The Market Composite Index, the Mortgage Bankers Association’s (MBA) measure of mortgage loan application volume, decreased 1.2% on a seasonally adjusted basis for the week ending May 23 compared to the previous week. On an unadjusted basis, the index decreased 2%.

The seasonally adjusted Purchase Index increased 3% from one week earlier while the unadjusted index increased 2% – the latter was also 18% higher than the same week one year ago. The Refinance Index decreased 7% from the previous week and was 37% higher than the same week one year ago, while the refinance share of mortgage activity decreased to 34.6% of total applications from 36.6% the previous week.

Among the federal programs, the FHA share of total applications remained unchanged at 17.9% from the week prior while the VA share of total applications decreased to 12.3% from 12.6% and the USDA share of total applications remained unchanged at 0.5%.

Separately, the Federal Housing Finance Agency reported home prices rose 4% between the first quarter of 2024 and the first quarter of 2025. On a quarterly measurement, prices were up by 0.7% from the fourth quarter of 2024 to this year’s first quarter. The seasonally adjusted monthly index for March was down 0.1% from February.

The first quarter home prices were up on a year-over-year basis in 49 states and the District of Columbia; Hawaii was the lone state with a price decline, recording a 2.2% drop. The five states with the highest annual appreciation were Rhode Island (11.4%), West Virginia (9.3%), Connecticut (9%), Ohio (7.6%), and Wyoming (7.4%).