U.S. mortgage applications decline with a drop in refinancing -MBA

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Real estate signs advertise new homes for sale in multiple new developments in York County, South Carolina, U.S., February 29, 2020. REUTERS/Lucas Jackson//File Photo

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June 9 (Reuters) - U.S. applications for home mortgages declined last week as refinancing dropped to its lowest level since February 2020 with fewer homeowners able to take advantage of lower rates during a holiday-shortened week.

The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market index fell 3.1% in the week ending June 4 from a week earlier. This reflected a 5.1% decline in applications for refinancing and was 27% lower than the same week one year ago.

The purchase index increased 0.3% from a week earlier. The week's data included an adjustment for the Memorial Day holiday.

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"Home-price growth continues to accelerate, driven by favorable demographics, the recovering job market and economy, and housing demand far outpacing supply," Joel Kan, an economist at the MBA, said in a statement.

Surging home prices and limited supply has put a lid on home sales recently, and a record-low percentage of U.S. consumers believe now is a good time to purchase a home.

The average contract interest rate for traditional 30-year mortgages decreased to 3.15% last week from 3.17% the prior week.

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Reporting by Evan Sully Editing by Chris Reese

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