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Latest US MBA Purchase Index Drops to 131.4; Falling Mortgage Rates Still Fail to Reverse Sluggish Homebuying

By AI Insights

2026-11-05

Trend analysis based on the updated indicator. View the Indicator→

The newly released US MBA Purchase Index shows that for the week ending October 30, 2026 (Q4 2026), the index slipped again to 131.4 from 134.1 in the previous week. This data confirms that homebuying sentiment lacks the momentum to sustain its brief rebound, and overall willingness to purchase homes remains at a long-term trough. Compared to the level approaching 180 in the spring of this year, current homebuying momentum is heavily suppressed, indicating that the market is still deterred by exorbitant homebuying costs.

Observing the performance of key components, although the 30-year fixed mortgage rate dropped for the third consecutive week to 7.30% (down from 7.37% the prior week), overall mortgage application volume still fell by 1.2% week-over-week. Among them, home purchase loan applications decreased by 2% from the previous week and sharply declined by 19% compared to the same period last year; meanwhile, refinance applications only edged up by 0.1%, with a steep year-over-year plunge of 60%. Furthermore, to reduce initial repayment pressure, the share of borrowers opting for adjustable-rate mortgages (ARMs) hit a new high since September 2025.

Regarding the in-depth attribution of this data performance, Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), pointed out that the Federal Reserve's (Fed) decision to pause interest rate hikes at its October meeting indeed drove mortgage rates down to recent relative lows. However, even with borrowing costs easing slightly, potential buyers still face the dual squeeze of persistently high home prices and constrained overall affordability. This results in a market where, despite being sensitive to interest rate changes, substantial transaction momentum remains unable to expand, and the homebuying demographic continues to stay on the sidelines.

Looking ahead to future outlook and potential risks, the US housing market is expected to maintain a stalemate of "contracting volume and stable prices" in the short term (1-2 months). If subsequent employment data exceeds expectations and drives up Treasury yields, mortgage rates may climb back to the 7.5% high, further suppressing winter homebuying demand. In the medium term (3-6 months), the market is closely watching the trajectory of the Fed's monetary policy next year; if inflation indeed cools and a rate-cut cycle begins, mortgage rates are expected to approach 6% to 6.5%. Only then could we see the return of pent-up buying demand, injecting a substantial recovery catalyst into the sluggish housing market.

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