Despite a steep dive in pending home sales (see chart below), mortgage applications surged 6.7% last week as all-time low rates lured homeowners to refinance their home loans. According to the Mortgage Bankers Association, 78.7% of all applications received last week were for refis. That’s the highest level of refinance activity in over a year.
But applications for home purchases fell 2% — that’s eight declines in the past nine weeks. As the chart shows, pending home sales have dropped off dramatically since the homebuyer tax credit expired, leading more experts to predict another dip in home prices, one that many agree won’t pass until employment picks up.