Mortgage applications hit a near four-year low in July dropping for the third month in a row with a 1.8% decrease in applications during July.

So, what’s behind the dwindling demand for mortgages? Lots of things.

First and foremost, it’s just really, really expensive to buy a home right now.

Interest rates have been on the rise for a long time, and while the Federal Reserve did not raise rates in its July-August meeting, experts expect that it will raise rates twice more by the end of the year. At the same time, inventory is painfully tight, which is driving home prices way up and putting a chill on buyers’ opinion of the housing market.

A recent study from Trulia shows that the profitability of buying a home has fallen to a six-year low, meaning that for many Americans it is making less and less financial sense to buy a home.

All of this adds up to a home buying sentiment that is drooping close to a 10-year low, and many Millennials say they’ve lost hope in the idea homeownership.

Despite growth in employment numbers and employers going on hiring frenzies, people still can’t afford homes. Wage growth has remained stagnant while the costs of living have been steadily climbing.

Many of the jobs being created are entry-level with wages unable to absorb the cost of a home. Wages are growing, posting a 2.8% gain in the last year, which is the biggest pay and benefit increase Americans have seen in nearly 10 years. The problem is, it’s just not enough to counter the rapidly increasing cost of buying a home.

 “Unfortunately, home price and rent growth above incomes – driven primarily by a severe shortage of housing supply – have been too high of a hurdle for many would-be buyers to clear,” Freddie Mac Chief Economist Sam Khater said.

The rate of rent growth is now tapering off, but rents are still climbing, and home prices have yet to find their ceiling. The average person with one hand on the first rung of the property ladder is clinging for dear life to his or her lease and struggling to save up for a home.

“At a time when rising home values continue to build housing wealth for most homeowners, these weaker affordability conditions have led to a missed opportunity for the interested young buyers who are unfortunately priced out of the market,” he added.

Long story short, homebuyers need some good news– a drop in interest rates, relief from climbing home prices or a significant wage increase, maybe all three– in order to turn the tide on these homebuying blues.

3d rendering of a row of luxury townhouses along a street

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