(Bloomberg) -- A gauge of US mortgage applications for home purchases surged to the highest level since February as buyers seized on a small dip in borrowing costs and a greater selection of houses on the market.
The measure of purchase applications jumped 12.4% in the week ended Nov. 22 to 152.9, according to data released Wednesday by the Mortgage Bankers Association. While the percentage gain was the strongest since early 2023, the data are prone to large weekly swings around holidays.
MBA cited the first drop in borrowing costs in nine weeks, with the contract rate on a 30-year, fixed mortgage falling slightly to 6.86%.
Other pluses included a strong economy and a pickup in for-sale inventory, the group said. While the MBA didn’t cite this month’s election as a factor, several builders in recent earnings calls had also blamed uncertainty over the presidential race for keeping buyers on the sidelines.
Despite the improvement in mortgage costs, rates remain about three-quarters of a percentage point higher than they were in mid-September, just before the Federal Reserve reduced interest rates.
Financing costs began picking up after a number of strong economic reports led investors to believe the Fed would move slowly with future interest rate cuts. Mortgage rates continued rising after Donald Trump’s election on speculation his policies will be inflationary.
Along with the purchase applications data, MBA’s overall market index, which includes both purchase and refinance applications, gained 6.3%. The refinancing gauge slipped 2.6%.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
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