U.S. Q1 New Home Sales Plunge to 587,000 Units, Hitting an Over 3-Year Low and Missing Expectations by a Wide Margin

US Q1 MBA Purchase Index Bucks Trend with Third Consecutive Gain, Showing Rigid Demand Resilience Despite Surging Mortgage Rates

The latest data for the first quarter of 2026 shows that for the week ending March 13, the US MBA Purchase Index rose slightly to 172.9 from 171.3 in the previous week, marking a third consecutive week of gains. Although the 30-year fixed mortgage rate surged to 6.30% during the same period, hitting a multi-month high and dragging down the total volume of mortgage applications, pure home purchase demand bucked the trend and stood firm, outperforming market expectations. Observing the data details, the high-interest-rate environment dealt a severe blow to refinancing, with single-week application volume plummeting by approximately 19%. In contrast, the purchase application index edged up by nearly 0.9% against the trend. Among these, conventional home purchase loan demand remained flat, while the government-backed FHA and VA loan segments achieved growth, indicating that first-time homebuyers and specific buyer segments remain active. Delving into the driving forces, Bloomberg and MBA analysis pointed out that turmoil in the Middle East, which drove up oil prices and inflation concerns, is the main reason for the recent upward movement in US Treasury yields and mortgage rates. MBA Deputy Chief Economist Joel Kan stated: "Despite facing high interest rates, home purchase applications remain steady, mainly benefiting from the rebound in market inventory levels and the slowing of home price growth in multiple regions, which supported transaction activity." Looking at the short term (1-2 months), inflation data and geopolitical risks remain the biggest variables. If mortgage rates continue to stay high, it will inevitably put pressure on buyer affordability in the upcoming spring homebuying season. In the medium term (3-6 months), the market is closely watching the Federal Reserve's interest rate policy trends. If a rate cut cycle begins in the second half of the year, coupled with continuous improvements on the supply side, it will serve as a strong catalyst driving a comprehensive recovery in the housing market. Web search reference sources: https://tradingeconomics.com/united-states/mba-purchase-index https://www.mpamag.com/us/mortgage-industry/market-updates/refinance-boom-stalls-as-rate-shock-jolts-mortgage-market-into-retreat/569010 https://www.housingwire.com/articles/mba-mortgage-applications-drop/