Homebuyers dial back amid affordability issues, shaky economy

The volatile mortgage market has kept some potential homebuyers on the sidelines.

Mortgage rates have whipsawed of late, falling for a couple of weeks in concert with moves in the bond market caused by the Federal Reserve hiking interest rates, but jumping again in the past week.

"The purchase market continues to experience a slowdown, despite the strong job market," said Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Banker's Association. "Activity has now fallen in five of the last six weeks, as buyers remain on the sidelines due to still-challenging affordability conditions and doubts about the strength of the economy." 

The seasonally adjusted Purchase Index decreased 1% from one week earlier. 

Overall, demand for mortgage applications rose 0.2% from a week earlier, according to the weekly survey from the MBA.

HOME LISTINGS SURGE AT RECORD RATE AS HOUSING MARKET STARTS TO COOL

The Refinance Index increased 4% from the previous week.

"Refinance applications increased over three percent but remained more than 80% lower than a year ago in this higher rate environment," added Kan. 

The July jobs report could force the Federal Reserve to continue raising interest rates at the fastest pace since 1994 as it tries to crush inflation and cool the labor market.

JULY JOBS REPORT 'SCORCHER' RAISES ODDS OF ANOTHER SUPER-SIZED FED RATE HIKE

U.S. employers unexpectedly added 528,000 jobs in July, the Labor Department said last week, a surprisingly strong gain that defied fears of a slowdown in labor markets.

CLICK HERE TO READ MORE ON FOX BUSINESS

The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.