After rising slightly for the past two weeks, mortgage rates decreased two basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on February 12th. Bolstered by strong economic growth, a solid labor market and mortgage rates at three-year lows, housing affordability continues to measurably improve. These factors have caught the attention of many prospective homebuyers, driving purchase application activity higher than a year ago.
Mortgage applications decreased 0.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 6th. “Mortgage applications were relatively flat over the week, but it was a mixed bag for the different loan types. The 30-year fixed rate was unchanged and conventional applications declined for both purchases and refinances as borrowers held out for another drop in rates or shifted to other loan types,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “FHA purchase and refinance applications increased, helped partially by the FHA rate declining and remaining 20 basis points lower than the conforming 30-year fixed rate.” Added Kan, “Borrowers are increasingly utilizing FHA loans as affordability challenges remain, despite recent improvements. Similarly, the ARM share increased to a seven-week high with ARM rates almost a percentage point lower than fixed rates”.
Job growth was stronger than expected to start 2026, providing some relief to concerns about the state of the U.S. labor market. Nonfarm payrolls increased by 130,000 for January, above the Dow Jones consensus estimate for 55,000, according to seasonally adjusted figures the Bureau of Labor Statistics released Wednesday. The total also was an improvement over December, which saw a gain of 48,000 after a slight downward revision. The unemployment rate edged lower to 4.3%. A more encompassing measure that includes discouraged workers and those holding part-time positions for economic reasons slipped to 8%, down 0.4 percentage point from December. As has often been the case for the U.S. labor market, health care led job gains in January, adding 82,000 positions. Social assistance also rose, up 42,000 as the two categories were responsible for almost all the net job creation. Construction saw a gain of 33,000 following a year in which the sector saw little increase.
U.S. existing home sales tumbled to the lowest level in more than two years in January as falling inventory raised house prices. Home sales dropped 8.4% last month to a seasonally adjusted annual rate of 3.91 million units, the lowest level since December 2023, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales declining to a rate of 4.18 million units. Last month’s sales likely reflected contracts that were signed in November and December and would not have been impacted by the winter storms that slammed large parts of the country in January. Home sales decreased 4.4% on a year-over-year basis. “The decrease in sales is disappointing,” Lawrence Yun, the National Association of Realtors’ chief economist, said. “Affordability conditions are improving due to wage gains outpacing home price growth and mortgage rates being lower than a year ago. However, supply has not kept pace and remains quite low.”
