Surge in mortgage applications will prove short-lived

Mortgage applications for home purchase briefly touched a nine-year high in the middle of January, as a drop in mortgage interest rates tempted home buyers back into the market. However, even as interest rates have continued to decline, that jump in demand has already started to unwind. A slowing economy and lack of inventory is weighing on home buying confidence, with realtors’ confidence in the sales outlook suggesting the recent dip in existing home sales will continue over the next six months. Rental growth on the CPI measure edged back to a four-year low in December, but with market conditions still relatively tight, rents are not set for a sharp slowdown.