Mortgage volumes dropped for a fourth consecutive week, with the pace of both purchase and refinance originations slowing, the Mortgage Bankers Association reported.

Overall, new mortgage applications inched downward 1.8% from the previous week on a seasonally adjusted basis and came in 63% below volumes of a year ago, according to the MBA’s Market Composite Index, a measure of weekly activity based on surveys of association members. Volumes have fallen to a level not seen since February 2000, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting. 

The MBA’s Purchase Index edged down a seasonally adjusted 1% week over week. Compared to activity in the same seven-day period a year ago, volumes were 18% lower.

“Increased economic uncertainty and prevalent affordability challenges are dissuading households from entering the market, leading to declining purchase activity that is close to lows last seen at the onset of the pandemic,” he said in a press release.

“Weakening purchase applications trends in recent months have been consistent with data showing a slowdown in sales for newly constructed homes and existing homes,” he added.

Data released by the MBA this month showed new-home purchases down over 13%, while the National Association of Realtors also reported existing-home sales came in at a 2-year low.

The Refinance Index also fell, declining by 4% for the second week in a row. “With mortgage rates remaining well over 5%, refinance applications are now 83% below last year’s pace,” Kan said.

The share of refinance activity relative to overall volume also dropped to 30.7% compared to 31.4% the prior week. Adjustable-rate mortgages, meanwhile, accounted for 9.1% of all new applications, down from 9.5% seven days earlier.

But despite the steep decline in refinance volumes this year, Fannie Mae reported that on a dollar basis, they are still running ahead of levels compared to the fourth quarter of 2018 — the most recent significant market downturn for the particular transaction — based on data sourced from its own automated underwriting system. “Refi dollar volumes remain meaningfully higher, consistent with the substantial home price appreciation we’ve seen over the past few years," said Fannie Mae Chief Economist Doug Duncan. 

Compared to a year ago, though, refinance dollar volume is off by almost 80%, Fannie Mae said. 

According to MBA’s research, the mean size of refinances last week dropped 2.6% to $269,400 from $276,500 seven days earlier. The average purchase amount grew, though, by almost 1% to $410,400 from $406,600 after falling the prior week. The overall average of new applications nudged up by a hair to $367,100 from $365,800

Although they posted an uptick, purchase-size averages have trended downward since hitting a record of $460,000 in March, with last week’s number nearly 11% lower. Data from both the S&P CoreLogic Case-Shiller Index and the Federal Housing Finance Agency’s Home Price Index over the past few days showed further softening in housing costs over the spring, as demand diminished following large interest-rate spikes. Real-estate brokerage Remax also reported nationwide inventory up by over 30% month-over-month in June. 

“A potential silver lining for the housing market is that stabilizing mortgage rates and increases in for-sale inventory may bring some buyers back to the market during the second half of the year,” Kan said.

The MBA reported seasonally adjusted government-backed activity declining last week by approximately 3%, with its share relative to total volume also decreasing. Federal Housing Administration-backed loans made up 12.1% of the entire pool, down from 12.4% the week prior. The percentages of applications coming through the Department of Veterans Affairs and U.S. Department of Agriculture were unchanged, remaining at 10.6% and 0.6%, respectively.

The contract average of the 30-year conforming fixed-rate mortgage with balances of $647,200 or below decreased among association lenders, dropping to 5.74% from 5.82% seven days earlier, the only category to come in lower.

The contract fixed-rate average for 30-year jumbo loans with balances above the conforming amount edged up a single basis point to 5.32% from 5.31% the prior week.

The 30-year fixed-rate contract average for FHA-backed loans increased 4 basis points to 5.54%, compared to 5.5% a week earlier.

The 15-year fixed-rate-contract mortgage average climbed 7 basis points to 4.95% after coming in at 4.88% the previous week.

The contract average for the 5/1 adjustable-rate mortgage also jumped 7 basis points, coming in at 4.67%, up from 4.6% seven days prior.