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Despite the Mortgage Bankers Association’s (MBA) tracked 30-year, fixed-rate mortgage rate moving further downward, by one basis point from the previous week to a new record low of 3.29%, mortgage activity slowed, per the latest Weekly Application Survey. The Market Composite Index, representing purchasing and refinancing activities, decreased by 1.8% on a seasonally adjusted basis from one week earlier, with the Purchasing and Refinancing Indexes individually declining by 1.3% and 2.2%, respectively. The MBA cites the resurgence of COVID-19 cases among a plurality of states as a key contributor to the slowdown, with investors gauging its effects on the labor market.

After two months of strong growth, purchase applications declined for the second week in a row. The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers’ options. The MBA also noted that tight inventory may have been a cause of quick price growth in home purchasing, as the average purchase application loan size reached a record high in its survey.

On an unadjusted basis, the Refinance Index decreased 2 percent from the previous week and was 74 percent higher than the same week one year ago.