Joel Kan, the deputy chief economist for the association, said that lending rates are still far higher than year-ago levels.

“Elevated rates continue to both impact homebuyer affordability and weaken demand for refinancing,” he said. “Home purchase activity has been very sensitive to rates and local market trends, including the very low supply of existing-home inventory.”

The week-on-week decline in lending rates, however, may help explain the slight increase in refinancing. MBA data showed the share of mortgage activity attributed to refinancing an existing loan increased 0.4% to 27.2% of all applications.

Meanwhile, the number of newly constructed homes accounts for a greater share of what’s on the market, giving would-be buyers a few more options.

That said, recent data show those homes are increasingly more expensive. While a lagging indicator relative to MBA data, the federal government reported the average price for a new home sold in March was $449,800, compared with $435,900 for March 2022. Higher lending rates from year-ago levels, meanwhile, tacks more on to a monthly mortgage payment.

From a weakening labor sector, where wage growth is sluggish, to emerging headwinds in the housing market, pessimism is bubbling up in the U.S. economy. A late-April survey from The Conference Board showed consumers are turning pessimistic amid concerns about a possible recession. Purchases from everything from a home to a new appliance declined amid lingering inflationary pressures.